Miles of bumpy road
Rental-car company Avis is having a tough time persuading federal regulators to approve its planned takeover of smaller rival Dollar Thrifty, The Post has learned.
The Federal Trade Commission has been reviewing a possible Avis offer since May and is now conducting a second review, a source said.
The FTC staff is still gathering information on the price points of rental cars in various markets, including discounts.
Avis already owns Budget, a lower-priced brand that is considered a competitor to Dollar Thrifty. Avis maintains its Budget brand competes in the middle-price point of the rental market — a step higher than Dollar Thrifty.
“An Avis deal will be really difficult to get through, if not impossible,” a source close to the review said.
If the deal fails to gain approval, it would mean Dollar Thrifty shareholders made a mistake on Sept. 30, when they narrowly rejected a $50-a-share sale agreement with Hertz in hopes of a better deal with Avis.
At the time, Hertz and Dollar Thrifty maintained that a merger with Avis would face significant regulatory hurdles.
The FTC will likely make a ruling early next year, sources said. Any approval will probably come with concessions, including divestitures of certain airport locations.
This week Avis CEO Ronald Nelson said in a conference call that the FTC had not given the company any indication of how their investigation was going.
“We and Dollar Thrifty have provided the US Federal Trade Commission with literally millions of pages of documents and data,” Nelson said.
An Avis spokesman declined comment for this story. “I think it is premature to speculate on the outcome,” said another source.
Last month, Avis and Dollar Thrifty said they were working together to get anti-trust clearance, and Avis said it was committed to buying Dollar for its previously announced stock-and-cash terms of $52.79 per share. Dollar shares closed yesterday at $48.13 a share.
In April, Hertz reached a deal to buy Dollar Thrifty for $41 a share, sparking a bidding war with Avis.
Hertz owns the Advantage brand that competes in the lower end of the auto rental market, but it has a much smaller share of the market that it could easily divest.
In contrast, Avis would be far more reluctant to part with its bigger Budget brand. The fastest-growing part of the car-rental market is the budget sector.
