The second largest US car rental company bhind Hertz, Avis Budget Group Inc, , yesterday offered to buy rival Dollar Thrifty Automotive Group Inc for about $1.33 billion, topping a $1.17-billion bid  by Hertz Global Holdings, made in in April this year.

Avis made an unsolicited proposal to buy Dollar Thrifty for $46.50 per share comprising of $39.25 in cash and 0.6543 shares of Avis Budget stock currently priced at $7.25, valuing the Oklahoma-based Dollar Thrifty at about $1.33 billion.

Avis said that its$46.50 per share offer include the proceeds of a pre-closing special dividend to be paid by Dollar Thrifty and in line with Hertz offer.

But the Avis offer is still $2 below Dollar Thrifty's closing price on the New York Stock Exchange yesterday.

In April 2010, Hertz, the world's largest car rental company, offered to take over rival Dollar Thrifty for $41 per share or about $1.17 billion in cash and stock. (See: Hertz Global to take over rival Dollar Thrifty in $1.17 billion deal) 

Hertz's offer is currently worth $39.86 a share and Avis's is a premium of about 17 per cent over the Hertz offer.

New Jersey-based Avis said that it is prepared to enter into a merger agreement on same terms as the Hertz proposal, but which includes removing the matching rights, eliminating the break-up fees, and increasing the commitment to secure antitrust approvals.

Avis is basically demanding in its bid Dollar Thrift should require Hertz to do away with $44.6 million breakup fee and the right to match competing offers.

''A copy of the draft merger agreement that we are prepared to sign is being provided to your counsel.

These changes to the merger agreement provide a level playing field and address certainty of closing. In short, we believe that the higher purchase price we are offering, combined with the terms of our proposed merger agreement, makes our offer a superior one from the perspective of Dollar Thrifty and its shareholders,'' said Avis in a statement.

Hertz and Dollar Thrifty had executed a definitive merger agreement on 25 April 2010 and Dollar Thrift said that it continues to be bound by the terms of that agreement.

Hertz has also filed a preliminary proxy statement/prospectus regarding the merger with the Securities and Exchange Commission and Dollar Thrifty has scheduled a special meeting of shareholders on 16 September to vote on the deal.

However, Dollar Thrifty said that its board of directors will review and consider the terms of the Avis proposal in accordance with its fiduciary obligations to shareholders and in line with the its commitments to Hertz under the merger agreement.

Avis operates two globally recognized brands-Avis Rent A Car and Budget Rent A Car.

Its operation includes approximately 6,500 car and truck rental locations in the US, Canada, Australia, New Zealand, Latin America, the Caribbean and parts of Asia.

On average, its global rental fleet totaled more than 350,000 vehicles, and completed more than 23 million vehicle rental transactions worldwide in 2009. 

Avis generated revenues of $5.13 billion in 2009. Its Avis, Budget and Budget Truck brands accounted for approximately 61 per cent, 32 per cent and 7 per cent of its revenue respectively.

Dollar Thrifty rents and leases vehicles mainly in the US and Canada under Dollar and the Thrifty brand names in 613 locations, of which 296 outlets are company-owned and 317 franchised. For 2009, the company reported revenues of $1.5 billion and net income of $45 million.

(See: Avis Group's chairman Thomas P. Capo's letter of offer  to Scott L. Thompson, president and CEO, Dollar Thrifty Automotive Group)