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Appraisal Rights Litigation Blog

Category Archives: Perpetuity Growth Rate

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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

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 Again Rejects Merger Price and Awards Premium

Posted in Award Premium, Closely Held Target, Discounted Cash Flow Analysis, Discounted Net Income Analysis, Equity Risk Premium, Guideline Public Company Valuation, Independent Valuation, Merger Price, Perpetuity Growth Rate, Precedent Transactions

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

The Real Problem With Appraisal Arbitrage

Posted in Appraisal Arbitrage, Award Premium, Discounted Cash Flow Analysis, Fair Value, Merger Price, Perpetuity Growth Rate, Stock Market Price, Supply-side Discount Rate, WACC

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

Delaware Chancery Court Increases Appraisal Award

Posted in Award Premium, Discounted Cash Flow Analysis, Perpetuity Growth Rate, Risk-free Rate, Terminal Value, Valuation Expert

In a new ruling in the DFC Global appraisal case, about which we’ve posted before, Chancellor Bouchard has now reconsidered his prior award of 7% over the merger price and increased his prior award by an extra 9 cents per share, translating to an additional $12 million in value above his prior ruling. Both sides… Continue Reading