Hertz, Avis offer big bucks for Dollar Thrifty

A Dollar Rent A Car office in New York City.

TEXT OF STORY

Kai Ryssdal: There is, amazingly enough, more news from the mergers and acquisitions front. Today, one bidding war wound down, another one heated right up. Dell bowed out of its battle with Hewlett-Packard over the data storage company 3PAR. HP came in with the winning bid of almost $2.5 billion. Over in rental car land, meanwhile, Avis and Hertz are still going at it over Dollar Thrifty. Today, Avis bumped its offer up to $1.3 billion.

Marketplace's Janet Babin explains.


Janet Babin: Here's why Avis and Hertz are fighting over Dollar Thrifty even in a recession:

Neil Abrams: Dollar Thrifty has continued to actually outperform its competitors.

That's Neil Abrams of Abrams Consulting Group. He says Dollar Thrifty focuses on budget-conscious leisure travelers. Hertz is geared to business and upscale travelers, so the acquisition could generate millions of new rental customers for Hertz.

Avis already has a budget brand. So why is it willing to pay a premium for Dollar Thrifty?

Abrams: They don't want Hertz to get it.

Abrams says Avis and Hertz have always been fierce competitors. While the recession has hurt many travel-related industries, the rental car business has held up. With fewer customers, companies were able to trim their fleets, their biggest expense.

The recession also strengthened the used car market, so companies like Hertz and Avis can make money selling their old cars. Christopher Elliot blogs about travel. He says a more consolidated industry will be bad for consumers.

Christopher Elliott: Before, there might have been more competition, now there's less competition. So we can expect to pay higher rates, I think.

The Dollar Thrifty acquisition is subject to antitrust approval from the government.

I'm Janet Babin for Marketplace.

Comments

I agree to American Public Media's Terms and Conditions.
With Generous Support From...