Chancery Rejects Request to Enjoin Hertz Takeover of Car Rental Rival Dollar Thrifty

Chancery Rejects Request to Enjoin Hertz Takeover of Car Rental Rival Dollar Thrifty

In Re Dollar Thrifty Shareholder Litigation, C.A. No. 5458 (Del. Ch., Sept. 8, 2010), read 84-page opinion here. The Court of Chancery issued this opinion last night, denying the request for a preliminary injunction to block the merger by which Hertz would buy the shares of its smaller car rental industry rival Dollar Thrifty Automotive Group.

 

We will have more to say about this decision, but in the meantime, until we digest the novella, we provide an excerpt from the Court's own summary of its decision thusly:

 

On the record before me, I must deny the plaintiffs' motion. Despite the plaintiffs' skillful advocacy, the record after factual discovery does not support their claim that the Dollar Thrifty Board likely breached its fiduciary duty to take reasonable steps to maximize the value Dollar Thrifty stockholders would receive. Rather, the record reveals that the Dollar Thrifty Board, and its CEO Scott Thompson, has managed Dollar Thrifty successfully through a financial crisis that saw the company on the brink of insolvency and improved its performance to the point where the company was profitable and receiving plaudits from the stock market. The Board did so by economizing on costs and engaging in profitable arbitrage in handling the company's rental car fleet. Throughout the last several years, while managing the company, the Board has been open to selling the company if a deal favorable to the stockholders could be achieved. To that end, the Board engaged in lengthy discussions with both Hertz and Avis in the last several years. Each of Hertz and Avis ultimately walked away, in circumstances when they could have bought the company at a bargain price.

 

Read more Delaware business litigation case summaries and commentary on Delaware Corporate and Commercial Litigation Blog, a blog hosted by Francis G.X. Pileggi, of Fox Rothschild LLP.