Court allows Dollar Thrifty vote on Hertz deal

WILMINGTON, Delaware (Reuters) - Car rental company Dollar Thrifty Group (DTG.N) was cleared by a Delaware court to put its agreed $1.1 billion merger with rival Hertz Global Holdings (HTZ.N) to a vote by shareholders next week.

In a decision late on Wednesday, Chancery Court Judge Leo Strine refused to grant an injunction blocking the vote, scheduled for September 16.

Various institutional investors such as fund managers wanted the court to block the vote, arguing that the Dollar Thrifty board breached its fiduciary duty to shareholders by failing to conduct an auction for the company and by agreeing to a meager premium to the market price of the company's stock.

The investors also argued the board agreed to a termination fee and granted Hertz matching rights that they said stifled competing bids.

The judge rejected those arguments, saying the deal terms did not prevent Avis Budget Group CAR.N from coming forward with its own, higher offer for Dollar Thrifty.

"We think Judge Strine's decision hit the nail on the head," said Richard Broome, a spokesman for Hertz.

On Wednesday, Hertz's bid was worth about $39.04 per Dollar Thrifty share, well below the Avis bid of $47.40 and Dollar Thrifty's current share price around $48.

Avis has refused to include a fee if it cannot complete its proposed merger, and Dollar Thrifty has raised concerns that the Avis bid may run afoul of antitrust regulations.

"The deal protections in the merger agreement have not prevented Avis from presenting a competing bid," Strine wrote in his opinion. "The deal protections actually encourage an interloper to dig deep and to put on the table a clearly better offer rather than to emerge with pennies more."

Strine, in his 84-page opinion, said it was best for a judge not to intrude. If Avis is a serious bidder, it will address the Dollar Thrifty board's demand for a termination fee, he said.

An Avis spokesman declined to comment. Dollar Thrifty did not immediately respond to a call seeking comment.

In Thursday trading, Dollar Thrifty shares rose 30 cents to $48.11, Avis was up 1.7 percent at $10.38, and Hertz was up 2.4 percent at $9.99.

The case is In re Dollar Thrifty Shareholder Litigation, Delaware Chancery Court, No 5458.

(Reporting by Tom Hals; editing by John Wallace)