The Supreme Court heard argument yesterday from DFC Global and its dissenting stockholders. The court has not yet ruled, and nobody can predict how it will decide the case; the following questions and observations are just some of the points that different members of the full five-justice panel raised during argument: The court asked DFC Global… Continue Reading
In anticipation of tomorrow’s oral argument before the Delaware Supreme Court, Law360 published this piece offering insights into what may lie ahead for appraisal rights after the DFC Global and Dell appeals are decided.
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
Further to our prior post on the recent PetSmart decision, we wanted to highlight some key factors that led the court to peg its fair value determination at the merger price. In PetSmart, the Delaware chancery court found that the sales process, while not perfect, was good enough to produce a reliable indicator of PetSmart’s… Continue Reading
The Delaware Chancery Court just issued two significant appraisal rulings, the PetSmart opinion on Friday — awarding petitioners the merger price — and the SWS Group decision on Monday, which actually awarded stockholders less than the merger price. We will post separately about our observations on these rulings. In the meantime, one immediate reaction is… Continue Reading
The Financial Times published this critical assessment [$$$] of the DFC Global ruling and of the appraisal arbitrage strategy more generally, observing that the pending DFC Global appeal frames the current debate about what role, if any, merger price should play in appraisal cases.
Cooley LLP highlights that increased appraisals are being factored into mergers. Following up on a previous piece, Cooley LLP notes that appraisal costs can be large, referencing the over $50 million added to the merger price in Dell, and further comments on the rise of appraisal claims, which Cooley calculates as a 267% increase from… Continue Reading
In a recent podcast, the Columbia Law School BlueSky Blog features Delaware Vice Chancellor Laster – whose appraisal decisions we have covered repeatedly – discussing the appraisal remedy. While the entire podcast is certainly worth a listen, some important topics include the history of appraisal (~1:30); when markets may depart from fair value (~5:50); how appraisal may act as a reserve price (~9:30); the discovery… Continue Reading
In a piece published by BreakingViews (a Reuters site), “Singing Appraisals” author Reynolds Holding talks about the benefits of the appraisal remedy and how it can be a “useful check on unfair transactions.” We’ve posted previously on the importance of the appraisal remedy.
Professor Guhan Subramanian of the Harvard Business School, who was one of the Dell stockholders’ experts in the Dell appraisal case focused on the M&A deal process, has developed an ostensive “middle ground” between the competing approaches advanced by the respective amicus briefs filed by some two dozen law and economics professors in the DFC… Continue Reading
Further to our posts about the DFC Global appeal, today the Delaware Supreme Court granted the February 3 motion by the Law & Economics Professors arguing against the adoption of a presumption requiring chancellors to defer to merger price in all M&A deals resulting from an apparently robust auction process. The Supreme Court is now… Continue Reading
Further to our recent post about the newest amicus brief offered up to the Delaware Supreme Court — arguing against the adoption of a merger price rule in appraisal cases — the Business Law Prof Blog posted this balanced assessment of the competing amici briefs and highlighted their key takeaways. Quoting in turn to the… Continue Reading
Further to our prior posts on DFC Global’s appeal to the Delaware Supreme Court, a new group of law and economics professors moved the Court on Friday to consider their brief rebutting the amicus brief previously filed in support of DFC Global’s appeal; the prior brief argued for instituting a new rule requiring deference to… Continue Reading
This article by Stout Risius Ross surveys all appraisal rulings since 2010 and identifies certain key metrics in those decisions, including the court’s valuation methodology, whether an auction or go-shop was included in the M&A transaction, and the mean and median premium over merger price resulting from those awards.
Last month we wrote about the Lender Processing case, which ultimately awarded deal price and contained an instructive survey of recent appraisal law. For another view of this case, see the January 11, 2017 post on Harvard Corporate Governance.
We have posted before about the amicus brief that a collection of law professors has asked to put before the Delaware Supreme Court as it hears the DFC Global appeal. On Friday, the Supreme Court granted their request and will consider their submission advocating that the chancery courts should defer to the merger price when… Continue Reading
In a new post by the Harvard Law School Forum on Corporate Governance and Financial Regulation, Professor Albert Choi (Virginia Law School) and Professor Eric Talley (Columbia Law School) present their new working paper, which asks how best to measure “fair value” in an appraisal proceeding. Applying principles of game theory and auction design, the… Continue Reading
Law360 has provided some Delaware Chancery Cases to Watch in 2017 [$$$], highlighting the DFC Global case, which we’ve blogged about previously. The Law360 commentary, like ours, notes that this will be an opportunity for the Delaware Supreme Court to weigh in on the factors relevant to appraisal and will be a closely watched decision.
We have blogged before about the purported “friend of the court” brief that a group of law professors would like to file with the Delaware Supreme Court, urging the Court to reverse the Chancery Court’s ruling awarding DFC Global stockholders a premium to the merger price. The stockholders have now filed their own brief opposing… Continue Reading
We posted earlier this week about DFC Global’s appeal to the Delaware Supreme Court, challenging Chancellor Bouchard’s award to stockholders of a premium over merger price. Yesterday, a group of law and corporate finance professors from various universities moved the Supreme Court to allow them to file so-called amici curiae briefs as non-party “friends of… Continue Reading
We’ve posted before about the DFC Global decision, in which Chancellor Bouchard awarded a 7% premium over merger price, and then further increased that uplift by 9 cents in a ruling on reconsideration. That ruling is now on appeal to the Delaware Supreme Court, and the appellant’s brief was submitted last week. As reported in… Continue Reading
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
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
In response to the article on appraisal arbitrage by Gaurav Jetley and Xinyu Ji of the Analysis Group, about which we’ve posted before, Villanova Law Professor Richard A. Booth now argues in The Real Problem With Appraisal Arbitrage [via Social Science Research Network] that Jetley and Ji’s charge against the Delaware courts for overly indulging… Continue Reading