PARK RIDGE, N.J. — Hertz Global Holdings, the world’s largest car-rental company, and Dollar Thrifty Automotive Group climbed to more than one-year highs Monday on Hertz’s plan to buy Dollar for $1.2 billion in cash and stock.
The offer was worth $41 a share, Hertz said, based on a 5.5 percent premium to Friday’s closing price. Dollar closed Monday at $43.07, exceeding the offer price as the buyer’s shares rose, and investors are likely to expect Hertz to pay more.
Hertz gained 14 percent to its highest level since February 2008.
Hertz adds Dollar and Thrifty to its namesake and Advantage brands to extend its lead over Avis Budget Group as travel rebounds from the recession. Hertz, which also raised its full-year earnings forecast, will expand its global network to 9,800 outlets to gain sales outside the U.S.
“This gives them a four-brand strategy, which should give them an advantage competitively and allow them to share one back office and an opportunity to share fleet,” said John Healy, an analyst at Northcoast Research Holdings in Cleveland. “It seems to be very beneficial for Hertz shareholders.”
“This adds a midlevel brand that should supplement the high-price and status brand of Hertz,” said Bob Mc Adoo, a senior analyst at Nashville, Tenn.-based Avondale Partners.
Hertz climbed $1.81 to $14.69 in New York Stock Exchange composite trading, giving it a market value of $6.03 billion.
Dollar, based in Tulsa, Okla., rose $4.22 to $43.07 for a market value of $1.23 billion.
Based on the $1.2 billion purchase price, Hertz is paying 77 cents on the dollar for Dollar Thrifty’s $1.55 billion in annual sales, while the market value of Avis shows investors are paying 33 cents on the dollar for the company’s $5.13 billion in 2009 revenue.
The acquisition will result in cost savings of at least $180 million, including car purchasing and information- technology systems, Hertz said.
“The deal is attractive, accretive to earnings,” chairman and chief executive Mark Frissora said in a statement.
