The Battle for Dollar Thrifty

(TheStreet) -- A takeover battle between Hertz(NYSE: HTZ) and Avis (NYSE: CAR) for Dollar Thrifty(NYSE: DTG) has taken investors on a joy ride this year, and that may continue as rising demand for cheap rentals and a rebound in business travel are driving an earnings rebound.

Shares of Hertz, the largest publicly traded company in the business with a market value of $5.1 billion, have jumped 44% over the past three months in the wake of its failed bid for Dollar Thrifty, while those of smaller rival Avis, which has a $1.57 billion bid for Dollar Thrifty awaiting government approval, are up 46%. The Standard & Poor's 500 Index is up 13%.

Dollar Thrifty's shares, which have risen 79% this year as the company has been in play, have slipped 2.4% in the past three months as investors fret about the Avis deal. Dollar Thrifty is known for its cheap car-rental offerings and was one of the only auto-rental firms to make money last year.

The Avis-Dollar Thrifty deal, which was expected to have been approved by year-end, is being held up by the Federal Trade Commission (FTC), which has yet to give it anti-trust clearance. It's under scrutiny because the merger would give Avis a dominant position in the low-cost car-rental sector. It locked up a large segment of that business when it acquired then-bankrupt Budget Car Rental in 2002. Avis recently said it has given the FTC "millions of pages of documents" for its review.

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