Carpooling With Hertz And Dollar Thrifty
by Down Payment Lender | July 31, 2010 | In Automotive Industry News | No Comments
Hertz will be purchasing Dollar Thrifty Automotive, creating a car rental giant with almost 10,000 locations. The Hertz/Dollar Thrifty merger was announced this morning, and will cost Hertz about $ 1.2 billion in both cash and stock. The combined company will be 94.5 percent owned by Hertz stockholders, with the remaining 5.5 percent owned by Dollar Thrifty investors.
Value of Dollar Thrifty rising quickly
When Hertz Global Holdings, the owner of Hertz Rent-a-Car purchases Dollar Thrifty, it will be paying $ 41 a share. Just one year ago, Dollar Thrifty was trading at less than $ 2 a share. In early trading on Wall Street this morning, Dollar Thrifty shares rose to more than $ 42 a share. The story of Dollar Thrifty is one of corporate turnaround, since they were floundering in the bankruptcy of Chrysler and low rental demand just a year ago.
Hertz plans for expansion
Once Hertz completes the purchase of Dollar Thrifty, it will be able to boast 9,800 locations and a huge rental fleet. Hertz has announced that there are $ 180 million in "synergy cost cuts" that can be implemented when they merge. This cost-cutting, combined with increased revenue from additional locations, should pull Hertz out of the losses they have been posting. Over the last two years, per-share losses of Hertz stock have been between 12 and 51 cents. Hertz said it expects to return to profitability within the next two years.
Services with an increasing demand
With an increase in both business and leisure travel, Hertz and Dollar Thrifty have seen an uptick in demand for rental car services. Many large city residents are also choosing to rent vehicles, rather than own one. Hertz launched Connect By Hertz in 2008, an attempt to compete with car-sharing giant ZipCar. With wider age allowances and more locations to rent from, Connect By Hertz is making big inroads into the car-sharing industry. Hertz Connect is also making inroads into the college market, where ZipCars have a strong foothold, but the 21-year old age requirement has caused frustration.



