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Appraisal Rights Litigation Blog

Category Archives: Synergies

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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

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

Lender Processing Dissenters Receive Merger Price

Posted in Discounted Cash Flow Analysis, Interest on Appraised Value, Merger Price, Synergies

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

Delaware Chancery Looks to Merger Price in BMC Software Ruling

Posted in Appraisal Arbitrage, Discounted Cash Flow Analysis, Equity Risk Premium, Fair Value, Merger Price, Synergies, Terminal Value

Vice Chancellor Glasscock issued his valuation decision this week in the BMC Software case, which we have previously blogged about concerning its threshold ruling rejecting any share-tracing requirements and thus allowing appraisal arbitrageurs to proceed with a valuation case. As we have previously reported, Merion Capital was seeking a 45% premium to the merger price,… Continue Reading

With Unreliable Management Projections and No Market-Based Models, Delaware Chancery Pegs Fair Value to Merger Price

Posted in Appraisal Arbitrage, Discounted Cash Flow Analysis, Fair Value, Merger Price, Precedent Transactions, Synergies

Delaware’s latest appraisal decision in LongPath Capital v. Ramtron International Corp. adopted the merger price as its appraisal valuation, but stands apart from the other recent appraisal decisions that likewise fell back on transaction consideration. Here, the court’s lengthy opinion repeatedly lamented the lack of any remotely reliable means of valuation other than the merger… Continue Reading

Supreme Court Affirms Without Opinion Chancery’s Resort To Merger Price

Posted in Appraisal Arbitrage, Fair Value, Independent Valuation, Interest on Appraised Value, Merger Price, Synergies

Last week the Delaware Supreme Court’s en banc hearing in the CKx case resulted in a simple affirmance, without opinion, of the Chancery Court’s 2013 decision that the merger price in this particular case was the best proxy for the fair value of petitioners’ stock.  In CKx, the Chancery Court had rejected the valuation methodologies… Continue Reading

Delaware Supreme Court Schedules En Banc Review in Appraisal Rights Case

Posted in Discounted Cash Flow Analysis, Fair Value, Independent Valuation, Interest on Appraised Value, Merger Price, Synergies, Valuation Expert

The Delaware Supreme Court has scheduled the case of Huff Fund Investment Partnership v. CKx Inc. for en banc review in February 2015. The Chancery Court rejected the valuation methods proposed by the parties and deferred to the merger price as the only reliable indicator of value. The Chancery Court likewise rejected the shareholders’ argument… Continue Reading

Do Investors Need To Worry About “Synergies” in Appraisal Proceedings?

Posted in Fair Value, Merger Price, Operative Reality, Synergies, Valuation Expert

The purchaser of a company through merger often argues in a subsequent appraisal action that the price paid was too high and that the dissenting shareholder should be paid a lower amount. Tactically, it is important for the purchaser to impress the dissenting shareholder with down-side risk in pursuing the appraisal. The resulting inference of… Continue Reading