Dollar Thrifty Automotive Group, Inc. Investors File Lawsuit Over Takeover

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Company Name(s): 
Dollar Thrifty Automotive Group
Case Name: 
Dollar Thrifty Automotive Group Deal Case 05/03/2010
Case Status: 
Lawsuit Filed
Affected Securities
Lawsuit Overview
Type of Lawsuit: 
Mergers and Acquisition
Date Filed: 
Class Period End: 
Court of Filing: 
Oklahoma State Court

An investor filed a lawsuit in Oklahoma State Court on behalf of current investors of Dollar Thrifty Automotive Group, Inc. (NYSE:DTG), who purchased the DTG shares before April 26, 2010, alleging breaches of fiduciary duty arising out of the attempt to sell Dollar Thrifty to Hertz Global Holdings, Inc. via an unfair process and at a grossly unfair price.

Dollar Thrifty Automotive Group, Inc., located in Tulsa, OK, is engaged in the business of the daily rental of vehicles to business and leisure customers through company-owned stores.

On April 26, 2010 Dollar Thrifty Automotive Group (NYSE: DTG) and Hertz Global Holdings, Inc. (NYSE: HTZ) announced that they signed a agreement providing for Hertz Global Holdings to acquire Dollar Thrifty Automotive Group for a purchase price of $41.00 per share, in a mix of cash and Hertz Global Holdings common stock (HTZ), based on Friday's closing stock price. Under the terms of the $1.27 billion deal, the $41.00 per share purchase price is comprised of 80% cash consideration and 20% stock consideration. According to Dollar Thrifty Automotive Group the offer represents approximately a 19% premium to the 30-day average closing price of Dollar Thrifty's common stock.

But according to the complaint the plaintiff alleges breaches of fiduciary duty. The plaintiff alleges that certain officers of Dollar Thrifty violated applicable law by directly breaching their fiduciary duties of loyalty, good faith and fair dealing to the Company's shareholders.

In pursuing this alleged unlawful plan to cash out Dollar Thrifty's public shareholders for grossly inadequate consideration of $41.00 per share in a mix of cash and Hertz common stock, each of the Defendants violated applicable law by directly breaching and/or aiding the other Defendants' breaches of their fiduciary duties of loyalty, due care, independence, good faith and fair dealing. Instead of attempting to negotiate a transaction reflecting the highest price reasonably available for the Company's shareholders, Defendants allegedly spent considerable effort tailoring the Proposed Acquisition for their benefit, so the lawsuit.

Shares of Dollar Thrifty Automotive Group, Inc. (DTG) traded after the takeover announcement at $42.55 per share, and at about $39.25 per share the trading days before the news. DTG shares reached over $52 per share in 2007. At least one analyst has set a price target for Dollar Thrifty stock at $44.00 per share.