The prediction of industry veteran Sandy Miller regarding the buyout deal between Hertz Global Holdings Inc and Dollar Thrifty Automotive Group Inc was spot on. The planned USD2.3 billion merger of the top rental car businesses had failed, and Bloomberg in its report said Miller's prediction was accurate in a sense that he had an inside view on the proceedings.
The Federal Trade Commission had given its initial approval for the buyout deal one year ago, and demanded that Hertz to separate from its Advantage Rent A Car business to a company where Miller would become the chief executive officer. After under less than a month, the company fired Miller. Miller had cautioned the FTC to not provide the buyout a final clearance and reasoned that its plans to be an effective competitor to Hertz will sink on a management that does not have any industry knowledge. Four months after the FTC had finalized its investigation and had given its approval for the purchase, Advantage filed for bankruptcy. The company is now partially owned by Macquarie Capital with a 49.76% ownership stake.
GeyerGorey LLP antitrust lawyer Allen Grunes said, "What a screw-up. It's a huge embarrassment that it happened this quickly." Grunes also pointed out the fact that with the Advantage case as its example, it can be deduced that it is difficult to recreate competition in concentrated markets after mergers.
Advantage's parent company chief executive officer Tom McDonnell denied allegations that the FTC's plans for the rental car company had failed, and that the company is still operating while it looks for a potential buyer. McDonnell said in a phone interview, "There is new capital committed to the company and we think Advantage emerges from bankruptcy stronger, from a balance sheet perspective, than it has ever been,"
New York University law professor Harry First said, "This should strengthen enforcers' resolve to just say no to some mergers and not always try to look for a settlement. They're hard to effect and don't always reach the goals that enforcers want."
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