M&A

Direct General Settles with Shareholders

Paves the way for approval of its planned sale to a pair of private equity firms.
Stephen TaubMarch 7, 2007

Financial services company Direct General agreed to settle three derivative lawsuits with shareholders, paving the way for approval of its planned sale to a pair of private equity firms.

Last December, the company agreed to be acquired for $432.4 million in cash by buyout firms Elara, an affiliate of Fremont Partners, and Texas Pacific Group.

Under the proposed settlement, Direct General will pay $675,000 in attorneys’ fees and expenses, and the shareholders will dismiss their claims. In addition, stated the company, the parties will negotiate terms that would provide shareholders certain benefits if Elara sells Direct General within a certain time after the takeover closes.

Direct General also agreed to provide certain additional information to shareholders through filings with the Securities and Exchange Commission.

As a result of the deal, a special meeting of shareholders to consider the proposed merger has been scheduled for March 8.

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