TULSA — In the wake of the 2008 financial crisis — as much of the American auto industry was in free fall, credit markets were frozen, and few consumers were traveling — shares of Tulsa-based Dollar Thrifty Automotive Group plummeted to a low of 60 cents.
The rental car corporation's market capitalization withered and the stock was in danger of being pulled from the New York Stock Exchange as executives pondered whether bankruptcy was the wisest course.
“Our lenders wanted to liquidate the company and move on, which would have meant 100 percent job loss and no severance payment for employees, at a time when the U.S. economy was at its worst,” CEO Scott Thompson wrote in an email to employees this week.
The stock rebounded spectacularly as the company hammered out new terms with creditors and renegotiated deals on its vehicle fleet. But shares really took off after the recovering company attracted suitors in the form of the industry's largest players: Hertz and Avis.
Sunday, Hertz Global Holdings Inc. announced it would pay about $2.6 billion in cash for Dollar Thrifty, or $87.50 for each share — the same shares that traded for less than $1 for more than a month in early 2009.
The price is more than double what Hertz offered for Dollar Thrifty two years ago.
For the hundreds of Tulsa employees of the firm, the proposed merger immediately raises questions about layoffs. Thompson, in a letter to employees, said he expects jobs will be lost.
“Hertz will need the majority of the workforce to support our over $1.5 billion worldwide revenue base, but I expect there will be a workforce reduction as they integrate the companies,” he wrote.
The existence of a large Hertz operation in Oklahoma City prompted some Tulsa business leaders to back a bid from Avis Budget Group Inc. in hopes that it would retain more local employees. Avis eventually ended its pursuit of Dollar Thrifty.
Thompson said it's not clear what Hertz would do with the Tulsa operations.
“We have no information on Hertz's plans for the Tulsa operations, but my guess is that Hertz will benchmark the cost of functions in Tulsa against its Oklahoma City operations in determining where functions are located over the long term,” Thompson wrote.
“We have been assured by Hertz that all of our people will be considered for positions. Our agreement with Hertz includes protection of your current compensation and benefits for a period of time, including severance for those who are not retained. I am sure that Hertz will want the best people in this very competitive industry.”
The deal is expected to close by year's end, Hertz CEO Mark Frissora said Monday.
Frissora said the acquisition should create about $160 million in annual savings and provide opportunities for increased sales.
Both Hertz and Dollar Thrifty's boards have approved the deal, which still needs antitrust clearance from the Federal Trade Commission. Hertz said it has stayed in close contact with the FTC to secure clearance and that Dollar Thrifty will fully cooperate with the process.
Frissora is confident the two companies will be able to get the deal “swiftly approved” by regulators. He said the deal is more of a certainty this time because of the massive preparation Hertz undertook before the deal was announced.
CONTRIBUTING: The Associated Press