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
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
This piece by Law360, “Appraisal Actions May Be The Next Frontier For PE Shops,” discusses a range of reactions to the closely watched rulings in the DFC Global and Dell appraisal cases currently on appeal before the Delaware Supreme Court. Some commentators see the appraisal strategy becoming more attractive to private equity funds as the… Continue Reading
This Bloomberg BNA piece, “Dealmakers Eye Safeguards Amid Rising Valuation Challenges,” observes the spike in appraisal activity and queries whether M&A buyers are taking added steps to address appraisal risk.
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.
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
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
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
Today’s Hedge Fund Law Report ran an article about the appraisal remedy, its positive results and its distinctiveness from traditional stockholder litigation. That article, “Stockholder Appraisal Actions Present an Attractive Litigation-Based Strategy for Hedge Fund Managers,” also discusses the proposed legislative amendments, judicial limitations and potential opportunities that we’ve posted on before.
We have blogged before (see here) about a then-forthcoming law review article by Professors Charles Korsmo (Associate Professor at Brooklyn Law School) and Minor Myers (Associate Professor at Brooklyn Law School) analyzing the value-creation resulting from the increased use of appraisal arbitrage. The authors’ paper has now been published in the final 2015 issue of… Continue Reading
As reported in the Wall Street Journal, stockholders owning about 5 percent of AOL, Inc., are seeking greater returns than the $50/share buyout price paid by Verizon Communications by pursuing appraisal of their shares. The deal was valued at $4.4 billion. As reported in the article, this appraisal case is yet another example of how… Continue Reading
Professors Korsmo and Myers have once again lauded the benefits of appraisal litigation and chastised its critics for pressuring the Delaware bar council to reconsider its recent decision not to limit or eliminate appraisal arbitrage. In their latest piece, the authors reaffirm their findings that appraisal cases comprise that rare form of shareholder suit “where… Continue Reading
As we’ve previously posted, the Corporation Council of the Delaware bar had taken up the question of whether to ban or curtail appraisal arbitrage, and more recently decided to take no such action after determining that the practice had no discernable negative effects on mergers and acquisitions and, if anything, continued to protect shareholder value. … Continue Reading
We posted earlier this week regarding a white paper written by the Council of the Corporation Law Section of the Delaware state bar, which was issued alongside the Council’s proposed amendments to Delaware’s appraisal statute. The Council had considered amendments to address the practice of appraisal arbitrage, but ultimately did not make any recommendations to eliminate… Continue Reading
We posted last week about new legislative amendments to the appraisal remedy proposed by the Council of the Corporation Law Section of the Delaware state bar association, an influential group of Delaware lawyers. The amendments were accompanied by an explanatory white paper explaining the rationale behind those recommendations that the Council made, and of note,… Continue Reading
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
A new piece by Reuters Breakingviews, M&A at Last Finds a Way for Lawsuits to Pay, covers last week’s rulings on appraisal arbitrage by the Chancery Court in Ancestry.com and BMC (which we posted about last week), and also observes generally that appraisal actions are “surprisingly successful” and are thus witnessing a surge in filings… Continue Reading
The forthcoming article on appraisal arbitration by Professors Korsmo and Myers is rich with data confirming the sophistication of the new breed of appraisal rights petitioners. (A previous post linked to graphs demonstrating the recent sharp increase in appraisal petitions and the spike in the dollars at play in appraisal cases.) We wanted to highlight… Continue Reading
We thought readers would be interested in this recent article by Fried Frank, Why Delaware Appraisal Awards Exceed the Merger Price, providing an analysis of why the Delaware appraisal decisions since 2010 have produced valuation awards that are often significantly higher than the merger consideration. We do not necessarily endorse the assertions and conclusions in… Continue Reading
Among the compelling metrics compiled by Professors Korsmo and Myers in their article on appraisal rights that has been approvingly cited by the Delaware Court of Chancery, they have highlighted two key trends which, taken together, demonstrate the sophistication of the investors now driving what appears to be a pronounced spike in appraisal rights cases…. Continue Reading