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Hertz Revved Up for Dollar Thrifty on Advantage Bid

NEW YORK (TheStreet) -- Hertz (HTZ) may be set to clear one of the biggest hurdles to a possible acquisition of Dollar Thrifty (DTG), solidifying its position as the nation's second leading car rental chain.

On Thursday, Hertz said that it received approval from the Federal Trade Commission to divest its Advantage brand. The move that may pave the way for an acquisition of Dollar Thrifty, a deal Hertz tried but failed to cut in 2011 and has said it would retry this year.

An Advantage sale signals a revival of Hertz's interest in Dollar Thrifty

"We have agreed on the material terms of a divestiture of our Advantage business with a potential buyer and have provided those terms to the FTC staff," said Hertz chief executive Mark Frissora on the company's Thursday earnings conference call, without disclosing the bidder. "We believe we have made substantial progress toward our goal to obtaining antitrust clearance that would allow us to consider the terms on which we might move forward with that acquisition" of Dollar Thrifty, he added.

Already, Hertz had been expected to dust off its M&A playbook in 2012 and retry an acquisition of Dollar Thrifty to alleviate pricing pressures and wrench out cost savings, according to industry analysts.

Hertz may look at a merger with Dollar Thrifty as a way to stay aggressive after a 2012 share gain stronger than expected earnings and guidance. While analysts point to consolidation as a quick way for the second largest U.S. rental car company to continue to grow its profit margins, a deal still must overcome regulatory hurdles.

In October, Hertz pulled a cash and share exchange offer for Dollar Thrifty that valued the industry fourth player at $1.91 billion or $72 a share, on deteriorating market conditions, a negotiating deadlock and scrutiny from antitrust regulators. However, the company has kept hope of an eventual deal alive, indicating a continued 2012 push.

"[Our] Dollar Thrifty acquisition strategy remains the same, we continue to work forward constructively with the FCC on getting a consent decree and once we get that consent decree, our intension is to work with Dollar Thrifty's Board in order to try to consummate a transaction that makes sense to both companies," said Hertz CEO Frissora in a Feb. 23 earnings call.

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