This is shaping up as a tumultuous month in the U.S.-based car rental business with Hertz and Avis Budget engaged in a bidding war for Dollar Thrifty.
The rhetoric also is heating up in anticipation of a newly rescheduled Sept. 30 Dollar Thrifty shareholder vote on the Hertz bid.
The Dollar Thrifty board on Sept. 12 endorsed the latest Hertz bid, a $1.56 billion offer, which trumps the most recent Avis Budget bid for Dollar Thrifty at $1.3 billion in cash and stock. Hertz and Avis Budget each made a previous bid, as well.
The Dollar Thrifty Automotive Group, with its value-oriented Dollar and Thrifty brands, has 1,550 corporate and franchised locations around the world, including some 600 in North America.
Avis Budget came out swinging at Hertz after Hertz argued that a Hertz-Dollar Thrifty combination would be more likely than an Avis Budget-Dollar Thrifty merger to get regulatory approval by the Federal Trade Commission in the U.S. on antitrust grounds.
In unusually candid language, Avis Budget stated:
... Hertz cherry-picks data and time periods, and uses deeply flawed modeling, to present baseless and inflated divestiture numbers for an Avis Budget transaction. Proper economic analysis shows that Hertz and Avis Budget are comparably competitive with Dollar Thrifty.
Hertz contended that a Hertz-Dollar Thrifty merger would "better balance the industry" in relation to Avis Budget and Enterprise, which also owns the Alamo and National brands.
An Avis Budget merger with Dollar Thrifty would stifle competition because only two car rental companies -- the combined Avis Budget-Dollar Thrifty and Enterprise -- would control "all U.S. value brands," Hertz claimed.
In a statement, which it characterized as "setting the record straight on antitrust," Avis Budget argued that both Hertz and Avis Budget compete against Dollar Thrifty.
"Hertz competes aggressively and successfully with other value brands and generates revenues that are comparable to Thrifty's U.S. corporate location revenues," Avis Budget stated.
Avis Budget pointed to Hertz's traditional travel agency and online travel agency relationships as proof that Hertz, too, competes against Dollar Thrifty for value-oriented customers.
In fact, Hertz's exclusive relationship with AAA, which staffs retail offices and regional club websites, "generates more than $500 million of annual revenues at low price points -- typically lower than Dollar and Thrifty rates -- targeted to compete directly with Dollar, Thrifty and other value brands," Avis Budget stated.
Avis Budget also points to Hertz's relationships with Priceline and Hotwire to make the point that it is not just Avis Budget, Enterprise and Dollar Thrifty that target the value market, but Hertz is heavily involved, as well.
"Hertz's 'analysis' conveniently ignores the many hundreds of millions of dollars Hertz makes through low-priced rentals under its AAA discount program and through its share-leading position in low-priced rentals through Hotwire, Priceline and other channels," Avis Budget stated.
Hertz, according to the Associated Press, has already begun the process of putting its Advantage discount brand on the block as a way to speed closing the Dollar Thrifty deal if shareholders approved the Hertz bid Sept. 30.
The initial Dollar Thrifty shareholder meeting on Hertz's initial bid, made in April, had been scheduled for Sept. 16.
With Sept. 30 now the scheduled date for the shareholder vote, Avis Budget has plenty of time to make another offer -- if it chooses to do so.