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Appraisal Rights Litigation Blog

Category Archives: Independent Valuation

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Delaware Supreme Court Hears Argument in Dell Appraisal**

Posted in Award Premium, Discounted Cash Flow Analysis, Distinct from Fiduciary Duty Claims, Fair Value, Independent Valuation, Merger Price, Operative Reality, Stock Market Price, Supreme Court

As reported today in Law360 [$$], the Delaware Supreme Court heard argument yesterday on the chancery court’s ruling in the Dell appraisal case.  The court did not render its decision and did not indicate when it would do so.  We’ll continue to monitor the docket and post when the ruling comes down. ** Note: this… Continue Reading

Delaware Chancery Again Rejects Merger Price and Awards Premium

Posted in Award Premium, Closely Held Target, Discounted Cash Flow Analysis, Discounted Net Income Analysis, Equity Risk Premium, Guideline Public Company Valuation, Independent Valuation, Merger Price, Perpetuity Growth Rate, Precedent Transactions

In Farmers & Merchants Bancorp, an appraisal case involving a small closely-held community bank that was sold in a stock-for-stock deal valued at $83 per share, Chancellor Bouchard disregarded merger price, as well as the “wildly divergent valuations” of both sides’ experts.  He arrived at an independent valuation of $91.90 per share based on his… Continue Reading

Supreme Court Affirms Without Opinion Chancery’s Resort To Merger Price

Posted in Appraisal Arbitrage, Fair Value, Independent Valuation, Interest on Appraised Value, Merger Price, Synergies

Last week the Delaware Supreme Court’s en banc hearing in the CKx case resulted in a simple affirmance, without opinion, of the Chancery Court’s 2013 decision that the merger price in this particular case was the best proxy for the fair value of petitioners’ stock.  In CKx, the Chancery Court had rejected the valuation methodologies… Continue Reading

Delaware Chancery Court Looks to Merger Price for Fair Value

Posted in Discounted Cash Flow Analysis, Fair Value, Independent Valuation, Merger Price, Valuation Expert

We posted last month about the Delaware Chancery Court’s ruling in Ancestry.com, in which it upheld the growing practice of appraisal arbitrage. The Chancery Court has now rendered its valuation decision in that case, finding the merger price itself to be the most fair measure of stockholder value on a going concern basis. As Reuters… Continue Reading

Delaware Supreme Court Schedules En Banc Review in Appraisal Rights Case

Posted in Discounted Cash Flow Analysis, Fair Value, Independent Valuation, Interest on Appraised Value, Merger Price, Synergies, Valuation Expert

The Delaware Supreme Court has scheduled the case of Huff Fund Investment Partnership v. CKx Inc. for en banc review in February 2015. The Chancery Court rejected the valuation methods proposed by the parties and deferred to the merger price as the only reliable indicator of value. The Chancery Court likewise rejected the shareholders’ argument… Continue Reading

Preferred Stock Has Appraisal Rights Too — Sort Of

Posted in Fair Value, Independent Valuation, Preferred Stock, Waiver of Appraisal Rights

Like common stockholders, holders of preferred stock may exercise appraisal rights.  The extent of what those rights actually entail, however, may be far more limited than what common shareholders may experience.  As a general rule, preferred stock has the same appraisal rights as common stock, but “[u]nlike common stock, the value of preferred stock is… Continue Reading

Chancery Court Rejects Use of Merger Price in Appraisal Action and Accepts Experts’ Direct Capitalization of Cash Flows Valuation Method; Court Also Accepts Experts’ Use of Buildup Model

Posted in Buildup Model, Direct Capitalization of Cash Flows, Discounted Cash Flow Analysis, Fair Value, Independent Valuation, Merger Price, Short-Form Merger, WACC

On May 12, 2014, the Delaware Court of Chancery issued its latest appraisal opinion, Laidler v. Hesco Bastion Environmental, Inc., addressing, among other things, the limitations on the use of merger price in an appraisal proceeding. The petition for appraisal was brought by a former employee of Hesco Bastion USA, Inc. (“Hesco”), which manufactured and… Continue Reading

Chancellor Strine’s Elevation To Chief Justice of Delaware’s Supreme Court Will Benefit The Appraisal Process

Posted in Fair Value, Independent Valuation, No Proof of Wrongdoing Needed

Among the thirty-five appraisal rights opinions written by Chancellor Strine over the past decade are some of the most cited and comprehensive treatments of the appraisal rights remedy to date. On January 29, 2014, the Delaware General Assembly unanimously confirmed Chancellor Strine’s appointment to the Delaware Supreme Court, where he will also become the court’s… Continue Reading

Trading Price Is Not Indicative of The Fair Value of Stock Subject to Appraisal

Posted in Fair Value, Independent Valuation, Stock Market Price

As one Delaware judge put it long ago, the Delaware courts conducting an appraisal proceeding have long ago “rejected placing absolute confidence in the market price for a share of stock.” Kleinwort Benson Ltd. v. Silgan Corp., No. 11107, 1995 Del. Ch. LEXIS 75 (Del. Ch. June 15, 1995) (Chandler, V.C.). For one thing, a… Continue Reading