M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

Thursday, September 30, 2010

Dollar Thrifty Vote Goes Down

This is a big week for newsworthy shareholder votes!  Dollar Thrifty shareholders voted down the Hertz offer today (from Bloomberg): 

Dollar Thrifty Automotive Group Inc.’s shareholders rejected Hertz Global Holdings Inc.’s $1.46 billion takeover offer a day after Avis Budget Group Inc. added a breakup fee to its higher bid.

The vote at the special meeting in Chicago today was about 13.8 million shares against the Hertz bid, versus 11.8 million shares in favor.

Only 41% of the outstanding shares were voted in favor of the Hertz deal.  

For weeks Avis had refused to give Dollar Thrifty a reverse termination fee with an anti-trust/regulatory trigger - until yesterday when they offered up a $20 million fee.  To be honest, the 1.3% fee that $20 million represents is nothing compared the damage that might be suffered by Dollar should Avis walk away in the event of regulatory challenges.  I know that the reverse termination fee has been a big sticking point with the Dollar board, but given the small size of the one finally offered up by Avis, I can't imagine that the reverse termination fee was really driving many votes.  If you think about a reverse termination fee as an equivalent to a liquidated damages provision paid to the seller in the event the buyer is unable to complete the deal, even the $44 million offered up by Hertz was probably much too small.



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