Shareholder lawsuit targets Dollar General buyout

UPDATED 5:04 p.m. -- Barrett firm quick on the draw once again in suing over private equity buyout of a local public company

Email | Print By E. Thomas Wood

Updated 5:04 p.m. Monday: 

As night followeth day, the latest private equity buyout of a publicly traded Nashville-area company has attracted the latest shareholder lawsuit against the company that announced its plans to sell out.

Hours after news broke this morning of Kohlberg Kravis Roberts' $7.3 billion acquisition of Dollar General Corp., a complaint challenging the deal has been filed at Davidson County Chancery Court. Attorneys Tim Miles, Doug Johnston, Jerry Martin and Laurel Johnston of Barrett, Johnston & Parsley in Nashville got their runner to the courthouse by 3:00 this afternoon. The Barrett firm was first to file after the Central Parking, HCA, iPayment and Thomas Nelson buyout announcements, and it became lead plaintiff's counsel in each of those cases.

Today's lawsuit, filed in the name of shareholder William Hochman and available at this link, names Dollar General, members of its board of directors and KKR as defendants. It accuses them of trying to engineer a "squeeze-out" of shareholders through an "unfair process" that has led to a "grossly inadequate price" for the company.

The complaint claims the company's insiders "rushed to complete a merger agreement prior to March 26, 2007" in order to get the deal done before Dollar General's fiscal 2007 earnings release, due that day. Citing recent positive financial developments at the company as evidence that the numbers will impress the stock market, the lawsuit asserts: "Defendants know that absent their intervention the disclosure of this financial information will cause the company's shares to skyrocket," making the deal more expensive for KKR.

The plaintiff also objects to a termination fee and provision for expenses in the merger agreement that it says would amount to a payout of some $225 million to KKR in the event the deal does not go down as planned.

As it has done in similar recent cases, the Barrett firm is teaming with San Diego's Lerach Coughlin firm to pursue the legal action. New York's Abraham Fruchter & Twersky LLP is also on board as co-counsel.