September 2017

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 law firm is one of the counsel of record in the Dell case.

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 of appraisal litigation on M&A activity.  As reported in their study, their evidence implies that “appraisal remedies afford important protection for minority shareholders” during their sample period.

In light of blockchain stock ledgers coming to Delaware, commentators and news outlets are starting to take notice. Recently, Bloomberg has covered the idea of stock ledger blockchain, as has the Financial Times [$$]. The core difference between any possible blockchain stock ledger and the existing system would be the likely elimination of the concept of fungible bulk. A blockchain, or at least some iterations of a blockchain, would allow a diligent researcher to potentially trace a “share” (or whatever one unit may be called) through each transaction, each wallet, or each address, back to issuance/mining/founding. This may not necessarily be an easy process–but as it stands currently, such a process is truly impossible. The “shares” held by, for example, a prime broker, are non-differentiated (hence the idea of fungible); they are not individual “units.” Blockchain share ledgers would have implications for “naked” short selling, corporate governance, securities litigation, derivative actions, and, relevant here, appraisal. As reporters are observing, blockchain may also reduce transaction costs associated with M&A activity. This remains a development likely to generate continued interest going forward.