American car rental company, Hertz, has entered into a definitive merger agreement with Dollar Thrifty Automotive Group to acquire the company for $2.3bn.

Dollar and Thrifty operates approximately 280 corporate locations in the US and Canada besides maintaining global service capabilities through an expansive franchise network of approximately 1,300 franchise outlets in 82 countries.

Hertz chairman and chief executive officer Mark Frissora said the transaction provides Hertz instant scale with two new, well-established brands with airport concession infrastructure in the mid-tier value segment.

"We’ll be a stronger global competitive player with a full range of rental options not only in the U.S. but in Europe and other markets given Dollar Thrifty’s strong international presence," Frissora said.

"In addition, we look forward to moving efficiently and swiftly through the regulatory process having reached an agreement to divest our Advantage brand."

Further, the transaction allows Hertz to aggressively pursue mid-tier value and premium markets with dedicated brands, and compete even more effectively with its multi-brand peers, company said.

The transaction has been structured as a two-step acquisition and is subject to regulatory clearance by the Federal Trade Commission.

J.P. Morgan and Goldman, Sachs & Co. are acting as financial advisors to Dollar Thrifty while Cleary Gottlieb Steen & Hamilton are the legal advisors.

Hertz has also reached an agreement to sell the Advantage business to Franchise Services of North America (FSNA) and Macquarie Capital.

FSNA is rental car operator with subsidiaries including, among others, U-Save, Rent-a-Wreck, Practicar and X Press Rent-a-Car.

Hertz operates approximately 8,650 corporate and licensee outlets in approximately 150 countries in North America, Europe, Latin America, Asia, Australia, Africa, the Middle East and New Zealand.