Hertz sweetens Dollar Thrifty deal to $1.56 billion

NEW YORK (Reuters) - Car rental company Hertz Global Holdings Inc struck a sweetened $1.56 billion deal to buy Dollar Thrifty Automotive Group Inc on Sunday, outdoing a rival bid from Avis Budget Group Inc .

Hertz raised its bid for Dollar to $50 per share, including a $10.80 per share increase in the cash component of the offer, and the two sides amended their merger agreement, Hertz spokesman Richard Broome said. The price also includes $122 million of options and restricted shares.

Hertz had in April agreed to buy Dollar Thrifty for about $1.1 billion. Other major provisions of their original deal are unchanged, including a $44.6 million breakup fee payable to Dollar Thrifty if required antitrust clearance is not obtained.

In a move to ensure it will get regulatory clearance for the deal, Hertz has also started the process of divesting its low-cost unit Advantage Rent-a-Car, Broome said.

Hertz said it had already received unsolicited interest from several parties for the Advantage business, which operates in 25 U.S. markets and was bought by Hertz in April last year.

Low-cost brands like Dollar Thrifty -- one of the few major car rental brands to post a profit in 2009 -- have become increasingly important in the car rental industry as consumers try to save money in tight economic times.

Avis, which has been trying to wrest Dollar Thrifty away from the Hertz deal, increased its offer by 3 percent earlier this month to $1.36 billion.

Dollar Thrifty had rebuffed Avis' previous bid, even though that was also higher than its April deal with Hertz, on worries that Avis would not be able to close due to antitrust reasons.

Dollar Thrifty had also said then that Avis' unwillingness to offer it a fee if a deal is not completed was problematic.

Last week, a Delaware court cleared Dollar Thrifty to put its deal with Hertz to a vote by shareholders.

Hertz's latest deal with Dollar Thrifty consists of $43.60 in cash and 0.6366 of a share of Hertz common stock. The cash component includes about $6.87 per share to be paid by Dollar Thrifty as a special dividend just before closing.

Dollar Thrifty has postponed a shareholder vote on the Hertz deal to September 30 from September 16, Broome said.

Hertz, which had set its investor day for September 30, will reschedule it to a later date.

Dollar Thrifty was not immediately available for comment.

(Editing by Dhara Ranasinghe and Muralikumar Anantharaman)

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