Hertz move to take “poison pill” causes shares to hike

Article by Anita Panait, on January 3, 2014

Shares of Hertz Global Holdings Inc. surged $28.62 at the close last trading day in New York in 2013 after reaching a peak of $28.90, after the company announced adopting a so-called poison pill upon detecting “unusual and substantial activity” in its stock. Hertz’s board voted unanimously for a one-year shareholder-rights plan, which wasn’t adopted in response to any specific takeover bid or proposal to acquire the rental company.

The company saw unusual options activity in recent weeks and suspected that more than one activist investor has used options to take a position in its shares, two people privy with the matter told Bloomberg. Third Point LLC has acquired a stake in Hertz and is not planning to take an activist role, according to CNBC, citing unnamed sources.

The one-year plan entails Hertz issuing one preferred share purchase right for each share of common stock as of the close of business on Jan. 9, 2014. The rights cannot be exercised until 10 percent of Hertz common stock is bought by one person or group, with the exception of passive institutional investors whose threshold is 15 percent.

“We gather ‘activist investors’ have been accumulating Hertz shares,” Michael Millman, an analyst at Millman Research Associates, wrote in a note that also said that the company and Avis Budget Group Inc. are buyout candidates. He wrote that activist interest in Hertz has surged partly because the company has lagged behind Avis. Hertz gained unmatched pricing power after acquiring Dollar Thrifty Automotive Group Inc. in July 2013 for $2.3 billion, analysts have said.

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