Header graphic for print
Appraisal Rights Litigation Blog

Category Archives: Interest on Appraised Value

Subscribe to Interest on Appraised Value RSS Feed

Law360 Analysis: One Year After Prepayment Amendment

Posted in August 2016 Amendments, Interest on Appraised Value, Prepayment of Merger Consideration

Law360 [$$] recently carried an analysis by a trio of Delaware attorneys regarding the impact of 2016’s prepayment amendment to Delaware appraisal law.  Part of the August 2016 amendments allowed M&A targets to prepay dissenting shareholders an amount of their choosing, thereby stopping the accrual of interest on that portion of the merger price/amount at… Continue Reading

SWS Group: The Breakdown

Posted in Beta, Comparable Companies, Discounted Cash Flow Analysis, Equity Risk Premium, Fair Value, Interest on Appraised Value, Merger Price, Perpetuity Growth Rate, Size Premium

Further to our prior post about Delaware’s two new appraisal decisions, SWS Group was a small, struggling bank holding company that merged on January 1, 2015 into one of its own substantial creditors, Hilltop Holdings.  Stockholders of SWS received a mix of cash and Hilltop stock worth $6.92 at closing.  Vice Chancellor Glasscock rejected the… Continue Reading

Another Fed Rate Increase Again Raises Statutory Appraisal Interest

Posted in Federal Reserve Discount Rate, Interest on Appraised Value

Last week the Federal Reserve issued another rate hike, just months after its December rate increase.  The recent hike has increased the Fed’s discount rate — also known as its primary credit rate — by 0.25%, up to 1.50%. Effective as of March 16, 2017, this will increase the rate of statutory interest in appraisal cases… Continue Reading

Fed Rate Increase Bumps up Statutory Appraisal Interest

Posted in Federal Reserve Discount Rate, Interest on Appraised Value

The Federal Reserve’s recent rate hike, the second one in as many years, has increased the Fed’s discount rate — also known as its primary credit rate — by 0.25%, up to 1.25%. Effective as of December 15, this will increase the rate of statutory interest in appraisal cases to 6.25%, compounded quarterly, as the appraisal… Continue Reading

Lender Processing Dissenters Receive Merger Price

Posted in Discounted Cash Flow Analysis, Interest on Appraised Value, Merger Price, Synergies

Today Vice Chancellor Laster issued a new appraisal ruling, Merion Capital LP v Lender Processing Services, pegging the appraised fair value to the merger price. The court found no reason to depart from merger price given the apparently reliable sale process and reliable projections.  The court performed its own DCF valuation, which came out 4%… Continue Reading

Appraisal Rights in New York

Posted in Appraisal-Eligible Deals, Interest on Appraised Value, New York Appraisal Rights, Notice of Demand for Appraisal

The New York Law Journal recently ran an article, Looking Beyond Delaware: Exercising Shareholder Appraisal Rights in N.Y. [via ALM], which analyzes the New York appraisal statute and observes that while appraisal litigation has remained underutilized outside of Delaware, it is possible that with the uptick in Delaware appraisal New York will see more appraisal… Continue Reading

The Case for Appraisal Rights

Posted in Award Premium, Fair Value, Interest on Appraised Value, Number of Appraisal Rights Filings

For an interesting overview of the appraisal process and a concise summary of the merits and risks associated with litigating appraisal rights, we recommend reviewing the article “Opportunistic Investing – the Case for Appraisal Rights” from Neuberger Berman’s Hedge Funds Solutions Group. In describing appraisal as a “niche, legally intensive strategy” with the “potential for… Continue Reading

Delaware Chancery Again Awards Appraisal Uplift

Posted in Award Premium, Comparable Companies, Direct Capitalization of Cash Flows, Discounted Cash Flow Analysis, Fair Value, Interest on Appraised Value, Merger Price, Precedent Transactions

Delaware Chancery has again awarded appraisal petitioners a significant bump above the merger price.  In the ISN Software Corp. Appraisal Litigation, Vice Chancellor Glasscock was facing widely divergent valuation from the opposing experts, and relied exclusively on a discounted cash flow analysis as the most reliable indicator of fair value.  The court’s per-share valuation award… Continue Reading

Prepayment Strategies Under the New Appraisal Rules

Posted in August 2016 Amendments, Interest on Appraised Value, Prepayment of Merger Consideration

A key aspect of the August 1 changes to Delaware appraisal law permits companies to unilaterally prepay some or all of the merger consideration, thereby stopping the interest accrual on such prepaid amounts.  A recent article by Bloomberg discusses prepayment strategies under this new rule and echoes the point posted to this blog repeatedly: the new… Continue Reading

Appraisal is “Alive and Well”

Posted in August 2016 Amendments, Interest on Appraised Value, Prepayment of Merger Consideration

As reported in The Hedge Fund Law Report‘s article, “Recent Legislative and Judicial Developments Fail to Diminish Appeal of Stockholder Appraisal Actions As Strategy for Hedge Fund Managers” [$$$], the recent statutory amendments have failed to diminish the appeal of stockholder appraisal actions as a strategy for hedge fund managers.  According to this article, that… Continue Reading

Appraisal Amendments to Become Effective on August 1

Posted in Dollar Amount of Appraisal Rights Filings, Interest on Appraised Value, Prepayment of Merger Consideration, Short-Form Merger

Now that the amendments to the Delaware appraisal statute have been signed into law, the new provisions will apply to all M&A agreements entered into on or after August 1.  Here is a link to the rule as revised, showing the new terms (only Sections 8-11 relate to appraisal).  As we have posted previously, the… Continue Reading

Delaware Chancery Again Awards Value Above Merger Price

Posted in Award Premium, Beta, Comparable Companies, Discounted Cash Flow Analysis, Fair Value, Interest on Appraised Value

On July 8, the Delaware Court of Chancery issued its opinion in In re Appraisal of DFC Global Corp.  A financial buyer, Lone Star Fund VIII, acquired DFC Corporation in June 2014 for $9.50 per share in an all-cash deal.  Using a combination of a discounted cash flow analysis, comparable companies analysis, and the merger… Continue Reading

Will Appraisal “Reform” Be Successful?

Posted in Appraisal Arbitrage, Dollar Amount of Appraisal Rights Filings, Interest on Appraised Value, Number of Appraisal Rights Filings, Prepayment of Merger Consideration, Short-Form Merger

As we’ve previously covered in this blog, the Delaware Legislature has proposed two changes to its appraisal statute in response to an increasing number of appraisal filings.  The first proposal, the De Minimis Exception, would require that anyone bringing an appraisal action have, at minimum, a $1 million stake in the company or 1 percent… Continue Reading

Delaware Chancery Awards 28% Premium in Dell Appraisal Case

Posted in Award Premium, Fair Value, Interest on Appraised Value, Merger Price

In a highly anticipated appraisal decision, Vice Chancellor Laster today valued Dell’s common stock at $17.62 per share, reflecting a 28% premium above the $13.75 merger price that was paid to Dell shareholders on October 29, 2013.  The court further ordered that interest shall accrue on this amount at the statutory rate of interest (5%… Continue Reading

Proposed Appraisal Amendments Might Increase Filings

Posted in Dollar Amount of Appraisal Rights Filings, Interest on Appraised Value, Prepayment of Merger Consideration, Short-Form Merger

Today’s New York Times ran this piece analyzing the proposed Delaware amendments on appraisal proceedings, which we blogged about last week.  The New York Times shares our own observation that the proposed legislation’s provision allowing for prepayment by the M&A target could have the unintended effect of increasing appraisal filings: “Rather than discourage appraisal petitions,… Continue Reading

Proposed Changes to Delaware Appraisal Statute OK’d By Delaware House

Posted in Dollar Amount of Appraisal Rights Filings, Interest on Appraised Value, Short-Form Merger

Proposed changes to the Delaware appraisal statute have cleared Delaware’s House of Representatives without dissent, and now move on to the state Senate.  The new legislation, which we blogged about in March, sets a floor for the number of shares and value of suit necessary to bring an appraisal action.  It also permits M&A targets… Continue Reading

Proposed 2016 Changes to Delaware Appraisal Statute

Posted in Dollar Amount of Appraisal Rights Filings, Interest on Appraised Value, Short-Form Merger

A number of amendments to Delaware’s appraisal statute have once again been proposed by the Corporate Council of the Corporation Law Section of the Delaware State Bar Association, the committee that customarily recommends legislative action to Delaware’s state lawmaking body. If certain proposed changes to the Delaware General Corporation Law (“DGCL”) are approved by the Corporation Law Section,… Continue Reading

Academics Propose New Reforms for Appraisal

Posted in Appraisal Arbitrage, Appraisal-Eligible Deals, Award Premium, Dollar Amount of Appraisal Rights Filings, Interest on Appraised Value, Merger Price, Number of Appraisal Rights Filings, Record Date

We’ve posted before about the article by Professors Charles Korsmo and Minor Myers analyzing the recent surge in appraisal activity.  These co-authors have prepared a new draft article to be published in the Delaware Journal of Corporate Law, proposing reforms for appraisal litigation.  Based on their latest research the authors stand by their prior conclusion… Continue Reading

Analyzing the Observed Increase in Appraisal Arbitrage

Posted in Appraisal Arbitrage, Equity Risk Premium, Interest on Appraised Value, Record Date

The July 2015 article “Appraisal Arbitrage – Is there a Delaware Advantage?” by Gaurav Jetley and Xinyu Ji of the Analysis Group analyzes the extent to which economic incentives have improved for appraisal arbitrageurs in recent years, which the authors believe helps explain the “observed increase” in appraisal activity.  The article concludes that appraisal arbitrageurs… Continue Reading

Mining for Gold in the Silver State: Nevada Appraisal Rights

Posted in Interest on Appraised Value, Merger Vote, Nevada Appraisal Rights

When the Delaware legislature recently struck down fee-shifting bylaws — those internal corporate laws that force losing plaintiffs to pay the company’s legal fees — it prompted a slew of commentary (e.g., here and here) suggesting Delaware may lose its place as the top venue to incorporate.  Nevada has been making a play to provide… Continue Reading

Appraisal Rights a Hot Topic at 27th Annual Tulane Corporate Law Institute

Posted in Appraisal Arbitrage, Interest on Appraised Value, Merger Price

Delaware judges, SEC leaders and lawyers from across the country convened in New Orleans last week for the 27th annual Tulane Corporate Law Institute, a two-day series of panels on March 19-20 analyzing Delaware corporate law and M&A deal making.  Appraisal arbitrage garnered considerable attention as several panels discussed the practice as well as the… Continue Reading

Delaware Bar Committee Introduces Proposed Legislative Amendments to Appraisal Remedy

Posted in Appraisal Arbitrage, Dollar Amount of Appraisal Rights Filings, Interest on Appraised Value, Number of Appraisal Rights Filings, Record Date

The Corporation Council of the Delaware bar released proposed amendments to Delaware’s General Corporation Law last week.  Among the various proposals, ranging from fee-shift provisions to forum-selection clauses in corporate bylaws, the committee proposed two changes to Delaware’s statutory appraisal remedy: first, to bar appraisals by shareholders holding 1% or less of the outstanding stock of… Continue Reading