Hertz Makes A Crazy Offer For Dollar Thrifty
Hertz (NYSE: HTZ) made a wildly high offer for Dollar-Thrifty (NYSE: DTG). The value of the possible buyout is $2.24 billion. That equals$72 a share, although the real value of the offer is hard to figure because part of it…
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Avis-Budget (NYSE: CAR) thought it has a definitive deal to buy Dollar, but its board must look at other possibilities because of its fiduciary duty.
The Hertz bid is 24% above Avis’s which makes it hard to justify. Earlier this year, Dollar-Thrifty traded below $48.
There is absolutely nothing in the Dollar-Thrifty financial statements which would justify such large premiums. In the first quarter, revenue was essentially flat at $348 million. Net income dropped from $47 million in the same period last year to $30 million.
Each bid has at least two things which will work against the creation of value in the short term. The first is that “synergies”, or cost cuts, are not likely to justify a price which is 70% above where the stock traded less than six months ago. The other is that high oil and gas prices may stay high for months, or longer. That will make the rental car business one with little and perhaps negative margins
Douglas A. McIntyre
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Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.
McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.
His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.
A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.
TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.
McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.