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Appraisal Rights Litigation Blog

Category Archives: Merger Price

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The High Cost of Fewer Appraisal Claims, Revisited

Posted in Appraisal Arbitrage, Award Premium, Fair Value, Merger Price, Number of Appraisal Rights Filings

Lexology’s Federal Securities Law Blog has this analysis of the recent article we posted about, the High Cost of Fewer Appraisal Claims.  The author, from Porter Wright in Ohio, notes that the recent data on appraisal claims dispel certain arguments made by the anti-appraisal crowd. In particular, he writes, “Prior to the 2016 amendments, many… Continue Reading

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

New Study on Appraisal’s Protection of Minority Shareholders

Posted in Appraisal Arbitrage, Award Premium, Fair Value, Merger Price, Number of Appraisal Rights Filings

The Harvard Law School Forum on Corporate Governance and Financial Regulation posted yesterday on Merger Negotiations in the Shadow Judicial Appraisal.  In this post, Professors Brian Broughman, Audra Boone, and Antonio Macias address the explosion in merger litigation over the past decade and present their empirical study testing the competing explanations of the ex-ante effect… Continue Reading

Breaking Down the Delaware Supreme Court’s DFC Global Decision**

Posted in Fair Value, Merger Price, Perpetuity Growth Rate, Supreme Court

As we have posted before, the Delaware Supreme Court rendered its much-awaited ruling in the DFC Global case on August 1. Here’s a more detailed breakdown of the key elements of that ruling. I. No Judicial Presumption Imposing Mandatory Merger Price Ruling The Court started off its opinion by rejecting DFC Global’s request to establish… Continue Reading

Delaware Supreme Court Decides DFC Global Appeal**

Posted in Fair Value, Merger Price, Perpetuity Growth Rate, Supreme Court

Today the Delaware Supreme Court reversed and remanded the appraisal decision of the Chancery Court in the highly watched DFC Global case.  A more detailed post will follow, but we wanted to flag the ruling in the meantime. The court declined DFC Global’s request to impose a presumption by “judicial gloss” that would peg fair… Continue Reading

Breaking Down The Clearwire-Sprint Appraisal Ruling

Posted in Discounted Cash Flow Analysis, Distinct from Fiduciary Duty Claims, Fair Value, Merger Price, Perpetuity Growth Rate, Synergies

As we previously posted, the Chancery Court appraised the fair value of Clearwire Corp. to be $2.13 per share, substantially below the $5 per share merger price paid by Sprint Nextel Corp in July 2013.  This post will provide a more detailed breakdown of the ruling and the bases for Vice Chancellor Laster’s opinion. I. The… Continue Reading

CLS BlueSky: “Reality Check” on DFC Global By Profs. Korsmo and Myers

Posted in Appraisal Arbitrage, Fair Value, Merger Price, Supreme Court

Professors Korsmo and Myers, whom we have blogged about before, have a new post on CLS Blue Sky Blog, titled “A Reality Check on the Appeals of the DFC Global Appraisal Case.”  The Professors argue that the DFC Global appeal, which we’ve been covering, presents an attempt by deal advisors “to alter Delaware’s appraisal jurisprudence[,]”… Continue Reading

In Transaction Involving “Massive” Synergies, Chancery Court Finds Fair Value at Over 50% below Merger Price

Posted in Discounted Cash Flow Analysis, Fair Value, Merger Price, Synergies

Today the Delaware Chancery Court issued its ruling in the Clearwire case, which included claims for breach of fiduciary duty as well as appraisal arising from its acquisition by Sprint.  We’ll provide a more comprehensive breakdown of the decision in a later post. In the meantime, as reported today by Reuters, Hedge fund stung by… Continue Reading

Law360: “The Misconception About SWS Appraisal Decision”

Posted in Award Premium, Merger Price

Law360 [$$] recently covered appraisal rights, presenting an analysis by attorneys at Fried Frank [pdf] discussing the SWS appraisal decision.  In their article, the Fried Frank lawyers note their view that it is a “misconception” that SWS heralds a new likelihood of below-merger-price appraisal decisions.  Reviewing the SWS decision and the appraisal jurisprudence, the authors… Continue Reading

Supreme Court Hears Arguments in DFC Global**

Posted in Fair Value, Merger Price, Perpetuity Growth Rate, Supreme Court

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

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

Delaware Chancery Hands Down Two New Appraisal Rulings

Posted in Appraisal Arbitrage, Merger Price

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

DFC Global a “Lightning Rod” for the Merger-Price Debate

Posted in Appraisal Arbitrage, Award Premium, Discounted Cash Flow Analysis, Fair Value, Merger Price, Supreme Court

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.

“Appraisal Risks Factor High”

Posted in Appraisal Conditions, August 2016 Amendments, Entitlement to Appraisal, Merger Price

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

CLS BlueSky: Podcast with Vice Chancellor Laster

Posted in Award Premium, Merger Price, No Proof of Wrongdoing Needed

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

More Academic Commentary on the Role of Merger Price in Appraisal

Posted in Award Premium, Merger Price, Supreme Court

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

Delaware Supreme Court Accepts Amicus Brief of Law & Economics Professors Resisting Merger Price Rule

Posted in Award Premium, Merger Price, Supreme Court

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

DFC Global Appeal Sets Stage for “Intellectual Cage Match”

Posted in Award Premium, Merger Price, Supreme Court

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

New Group of Law Professors Seeks to be Heard by Delaware Supreme Court**

Posted in Award Premium, Merger Price, Supreme Court

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