Car rental company Avis Budget Group said on Wednesday that it was dropping its bid to acquire Dollar Thrifty, ending a bidding war with Hertz over their smaller rival.Avis abandoned the takeover attempt "in light of current market conditions", it said in a filing with the US Securities and Exchange Commission.
Hertz, the world's largest car rental company, said in May that it was ready to buy Dollar Thrifty in a $2.2 billion deal, topping a previous offer from Avis of $1.6 billion.
Avis' decision on Wednesday clears the way for Hertz to buy Dollar Thrifty, which has about 1,550 locations, compared to Hertz's 8,500.
Shares of Hertz surged 9.3 percent in late morning trading on Wall Street, while shares of Avis Budget gained 2.2 percent. Shares of Dollar Thrifty were down 0.5 percent.Nevertheless, Avis Budget is proceeding with its $1.0 billion acquisition of Avis Europe, agreed in June.
The company dropped its bid for Dollar Thrifty in part because financing has become more expensive since June amid market volatility, and Avis Budget's priority was the Avis Europe deal, the Wall Street Journal reported, citing an unnamed source close to the deal.
Avis Europe separated from Avis Budget in 1986 but continued to use the Avis Budget brand under exclusive license in certain countries.