BANGALORE (Reuters) - U.S. car rental firm Hertz Global Holdings Inc had agreed to buy smaller rival Dollar Thrifty Automotive Group Inc for about $1.2 billion to boost its presence in the leisure rental market.
The deal marks a significant consolidation for the car rental industry, which is starting to recover from the global economic downturn helped by a pickup in travel and the used car market.
The cash-and-stock offer of $41 per share is at a 5.5 percent premium to Dollar Thrifty's Friday close of $38.85.
It values the company at $1.17 billion based on its shares outstanding of 28.6 million as on February 24 according to Reuters data.
The combined company will now have a single publicly listed U.S. company -- Avis Budget
"Dollar Thrifty also has a strong international presence, complementing our global footprint, which enables us to utilize a recognized brand to accelerate our leisure rental strategy in Europe and other markets," Hertz Chief Executive Mark Frissora said in a statement.
Dollar Thrifty, whose primary market is the United States, rents cars under the Dollar Rent A Car and Thrifty Car Rental brands.
In a separate statement, Hertz raised its adjusted earnings outlook for 2010 to 43 cents to 45 cents a share from 37 cents to 39 cents a share, indicating an improvement in business trends.
Hertz said it expects the deal, which is 80 percent cash and 20 percent stock, to be immediately accretive to its annual adjusted earnings when completed.
At the closing of the deal, Hertz will issue about 18 million shares of its common stock and pay about $750 million in cash, excluding the special $200 million Dollar Thrifty dividend, Hertz said.
Barclays Capital acted as lead financial advisor to Hertz and Bank of America Merrill Lynch also provided advice.
Hertz shares closed at $12.88 Friday on the New York Stock Exchange.
(Reporting by Bijoy Koyitty in Bangalore; Editing by Mike Nesbit and Erica Billingham)
