## Facts

- Dollar Thrifty Automotive Group, Inc. experienced severe financial distress during the 2008–2009 crisis but later recovered after significant cost-cutting and operational improvements.
- Over several years, Dollar Thrifty intermittently engaged in potential transaction discussions with Hertz Global Holdings, Inc. and Avis Budget Group, Inc., with antitrust risk a recurring obstacle.
- Dollar Thrifty entered a merger agreement with Hertz providing consideration of $32.80 in cash per share (including a $200 million special dividend payable only upon closing) plus 0.6366 shares of Hertz stock per Dollar Thrifty share, valued at roughly $41 per share at signing.
- The board did not run a broad pre-signing auction and did not formally include Avis in negotiations before signing, citing concerns about leaks, financing certainty, and antitrust complications in a concentrated market.
- The merger agreement included a termination fee, a reverse termination fee tied to antitrust failure, matching rights, and a covenant requiring Hertz to use reasonable best efforts to obtain antitrust clearance, including divestitures estimated at $100–150 million.
- After announcement, Avis publicly expressed interest and later made a proposal with an approximately $5.50 higher nominal per-share price, while indicating a willingness to divest assets to address antitrust risk.
- The Dollar Thrifty board questioned Avis’s financing readiness and commitment to antitrust remedies, concluded Avis’s proposal was not a “Superior Proposal” under the agreement, and continued recommending the Hertz deal.
- Stockholder plaintiffs sued, alleging Revlon duty breaches by the directors and aiding and abetting by Hertz, and sought a preliminary injunction to block the stockholder vote and closing.

## Issues

1. Whether plaintiffs showed a reasonable probability of proving that Dollar Thrifty’s directors breached Revlon duties by approving the Hertz merger without a pre-signing auction or fuller market check.
2. Whether the merger’s deal protections (termination fee, reverse termination fee, and matching rights) were impermissibly preclusive or coercive under enhanced scrutiny.
3. Whether the board acted unreasonably under Revlon in declining to treat Avis’s higher nominal bid as superior given financing and antitrust uncertainty.
4. Whether the balance of equities supported enjoining the stockholder vote and transaction pending trial.

## Decision

- The Court of Chancery denied the motion for a preliminary injunction.
- The court held plaintiffs failed to show a reasonable probability of success on the merits of a Revlon claim based on the process and circumstances presented.
- The court found the deal protections were not preclusive or coercive and did not prevent competing bids from emerging.
- The court accepted that the board could reasonably weigh closing certainty and antitrust risk against a higher nominal price.
- The court concluded the equities did not favor enjoining a transaction where stockholders could vote with extensive disclosure and an injunction risked disrupting a value-enhancing deal.

## Legal Principles

- Under Revlon enhanced scrutiny, the question is whether the board’s decision-making process and defensive measures were reasonable in relation to the goal of obtaining the best value reasonably available.
- Revlon does not impose a per se requirement to conduct an auction, run a broad market check, or invite every potential bidder into pre-signing negotiations; the process must be reasonable given the circumstances.
- Directors may consider risk-adjusted value, including regulatory risk, financing certainty, and likelihood of closing, and are not required to select the highest nominal price.
- Deal protections are impermissible only if they are coercive or preclusive—i.e., if they coerce stockholder choice or make a superior proposal realistically unattainable; the appearance and persistence of a topping bidder can be evidence against preclusion.
- At the preliminary-injunction stage, plaintiffs must show a likelihood of success on the merits, irreparable harm, and that the balance of equities favors injunctive relief.

## Conclusion

The court refused to enjoin the Hertz–Dollar Thrifty merger because the record did not support a likely Revlon violation: the board reasonably prioritized closing certainty amid significant antitrust risk, and the challenged deal protections did not foreclose superior bids or coerce stockholders’ decision.


In re Dollar Thrifty S’holder Litig., 14 A.3d 573 (Del. Ch. 2010)