Car rental company Avis Budget Group dropped out of the race to buy Dollar Thrifty , after a prolonged bidding battle with rival Hertz Global Holdings.

Avis said it had made significant progress in obtaining regulatory clearance for the Dollar Thrifty acquisition, but had decided not to pursue a transaction due to current market conditions.

Avis and rival Hertz have been chasing Dollar Thrifty for more than a year, amid growing consolidation pressure in the industry, and were in separate talks for antitrust approval.

Dollar Thrifty had set a deadline of October 10 for both the companies to make their final buyout offers, to end the continued uncertainty surrounding the deal.

It also adopted a poison pill to thwart unfriendly takeovers after Hertz raised it buyout offer in May. Hertz's offer is currently worth about $1.92 billion, based on the stock's last closing price.

However, after Avis acquired its European namesake in June for about $1 billion, Wall Street's expectations of a higher bid from Avis had come down significantly. Avis had not matched Hertz with a counter bid.

Shares of Hertz jumped nearly 9 percent to $10.88 in early morning trading, making them one of the top gainers on the New York Stock Exchange.

Dollar Thrifty shares fell 3 percent to $62.99, while Avis' shares rose 4 percent at $12.21 on Nasdaq. - Reuters