Vice Chancellor Slights has decided the Jarden appraisal case, a claim stemming from the 2016 sale of Jarden to Newell Rubbermaid Corp. In the opinion, the Vice Chancellor ultimately awarded below merger price, relying on a number of factors and discussing the interplay of merger price, unaffected stock price, discounted cash flow analysis and
Merger Price
Paper: MBOs Take Advantage of Industry Weakness
Appraisal is a remedy for shareholders who believe a merger is being consummated at below fair value. Appraisal is also a check on management and boards of directors – specifically, providing a ‘backcheck’ on whether the shareholder fiduciaries are achieving fair value for the company. Management buyouts are an acute case of mixed incentives for…
Was the Aruba Decision Driven by a “Struggle” about Dell and DFC?
Legal news site Law360 ran this analysis [$$$] of Aruba, focusing on whether the decision should be seen as a fight between valuation methodologies, or between two courts trying to fulfill their respective roles. The Chancery Court, left to apply the Delaware Supreme Court’s precedent to complex fact situations and manage cases from their infancy…
Breaking Down the Cornerstone Report: Premiums to Deal Price
The Cornerstone Report provides several data points concerning the frequency of court awards above merger price in appraisal actions as well as the size of the premiums and distinctions between results involving public and private companies. Between 2006 and 2018, Cornerstone reports 34 appraisal cases that went to trial; 16 resulted in awards above deal…
Will 2019 Bring Further Guidance on Sales Process & Synergies?
The Delaware Supreme Court has a few appraisal cases on its docket in 2019, including a case regarding what constitutes a robust – “Dell Compliant” – sales process as well as a case regarding how to understand synergies in appraisal. For a view of 2019 cases of note, see this coverage by law.com [$$$].
Recap of Tennessee Appraisal and Valuation Decision
Earlier in 2018, the Tennessee Supreme Court clarified Tennessee’s appraisal and valuation law in the case Athlon Sports Communications v. Duggan. Tennessee had long followed the “Delaware Block” system of valuation. The Delaware Block system averages market value, asset value, and earnings value to arrive at a valuation. But as one commentator has observed …
Merger Breakup Case: Valuation Questions
Appraisal cases increasingly focus on how markets react to merger news and what one learns from that. Recent cases that have looked to “unaffected” merger price – that is, the price of a share of the target company before the merger announcement – in part because of the fundamental truth that mergers are market moving…
What’s In a Name? Appraisal and De Facto Mergers
Appraisal rights are creatures of statute, and as a result, for the most part, the conditions for appraisal are laid out by the legislature. Many statutes provide for appraisal rights in instances where there is a “merger” – what one might traditionally understand as an entity purchasing another entity, or purchasing all the stock of…
Student Note: Appraisal Remedy Remains Critical Shareholder Protection
In “Appraisal Arbitrage: In Case of Emergency, Break Glass” – a student note published in the Notre Dame Law Review (93 Notre Dame L. Rev. 2191) – the author lays out a case for why appraisal, including appraisal arbitrage, remains critical to the overall scheme of shareholder protection. As the author observes, many a…
Upcoming Webinar Will Cover Appraisal
On October 18, 2018, Stafford Publishing is offering a webinar covering developments in Delaware law, including appraisal. 2017 saw numerous appraisal decisions (many of which we have covered) and movement in both the strategy and practice of appraisal. With a panel of Delaware attorneys well versed in appraisal as well as fiduciary duty litigation, the…