Hertz, Dollar Thrifty Deal Could Drive Shares
NEW YORK (TheStreet) -- After stronger than expected fourth quarter earnings, Hertz (HTZ) may dust off its M&A playbook in 2012 and retry an acquisition of Dollar Thrifty (DTG) to alleviate pricing pressures, according to industry analysts.
Hertz may look at a merger with Dollar Thrifty as a way to stay aggressive in 2012 after its shares rose sharply on Tuesday on stronger than expected earnings and guidance. While analysts point to consolidation as a quick way for the second largest U.S. rental car company to continue to grow its profit margins, it still must overcome regulatory hurdles.
|Hertz jumped the most in two months on Feb. 22 fourth quarter earnings|
In October, Hertz pulled a cash and share exchange offer for Dollar Thrifty that valued the industry fourth player at $1.91 billion or $72 a share, on deteriorating market conditions, a negotiating deadlock and regulatory scrutiny. However, the company has kept hope of an eventual deal alive, with its Chief Executive indicating a continued 2012 push.
Such a move would make sense as a quick way for the company to boost earnings, even if a merger isn't immediately needed for either Hertz or Dollar Thrifty, according to Fred Lowrance, an analyst with Avondale Partners. "