On Dec. 14, 2017, the Delaware Supreme Court handed down the Dell decision. We covered the decision previously.
In the month that has followed, coverage of the Dell decision has been intense. Numerous news outlets, blogs, corporate governance authors, and law firms have provided their own take on the Dell decision. We have collected some of that commentary, with illustrative quotations reflecting the breadth of that coverage, as follows.
Appraisal is the New Fiduciary Duty, Business Law Prof Blog. “The substitution of appraisal litigation for fiduciary litigation is near complete: improving upon deal price in the context of appraisal may be impossible unless something went wrong in the sales process (at least for the sale of a public company without a controlling stockholder).”
Appraisal Apprisal: Dell v. Magnetar, Eric Talley & Jeffrey Gordon, CLS Blue Sky Blog. “After Dell, one can safely assume that courts will focus even more intently on whether the merger price emerged from a robust and value-maximizing deal process.”
Finding the Right Balance in Appraisal Litigation: Deal Price, Deal Process, and Synergies; Lawrence Hamermesh and Michael L. Wachter, HLS Forum on Corporate Governance and Financial Regulation. “Facilitated largely by ‘appraisal arbitrage’ — the practice of purchasing shares of stock after announcement of a merger, with a view to exercising the statutory right to an award of ‘fair value’ in lieu of the merger price — the once-discredited appraisal remedy has become a significant phenomenon in shareholder litigation.”
Guest Post: From Corwin to Dell: Implications for Investors and Corporate Acquirers, the D&O Diary. “In sum, the arc of Delaware law from Corwin to Dell may result in under-enforcement of fiduciary duties through representative litigation, and may unintentionally entice increasingly aggressive breaches of fiduciary duties.”
In re Appraisal of Dell Inc.: The Continuing Relevance of Deal Price in Delaware Appraisal Proceedings, Business Law Today. “Dell does, however, indicate that MBO transactions will be subject to more rigorous scrutiny in the context of appraisal proceedings and, given certain inherent realities, may be less likely to be found to have produced a price equal to fair value. Even so, Dell does not foreclose a finding that the deal price in an MBO transaction equals fair value.”
Implications of the Recent Dell Appraisal Decision, Paul Weiss. “To reduce the risk of a large appraisal award, target boards may wish to make a record of their focus on the company’s intrinsic value, as opposed to the premium to market represented by the transaction price.”
Delaware Supreme Court Reverses And Remands Dell MBO Appraisal Decision, Finding The Trial Court Erroneously Disregarded The Deal Price, Shearman & Sterling. “The Court thus reversed and remanded with instructions to give such weight to the deal price, and explain the weight given to each factor considered, or — at the Court of Chancery’s discretion — to enter judgment at the deal price without further proceedings.”
Dell Ruling Bridges Philosophical Gap In Del. Appraisal Law, Law360 [$$]. “You can’t look at the Dell opinion and say the court was going to take just any old deal,” Hamermesh said. “It was a — show me your process is reasonable. There may be almost a presumption, but it’s rebuttable.”
Appraisal Litigation Update, Cadwalader, HLS Forum on Corporate Governance and Financial Regulation. “A Well-Executed Sales Process is Instrumental in Determining the Weight to be Ascribed to Deal Price in an Appraisal Analysis.”
Delaware Supreme Court Reaffirms Importance of Deal Price in Dell Appraisal Reversal, White & Case. “To prevent creating a bright-line rule, the Supreme Court was careful to note that it was not holding that ‘the market is always the best indicator of value, or that it should always be granted some weight.’ Rather, the Supreme Court noted that the record contained compelling evidence reflecting ‘market efficiency, fair play, low barriers to entry, outreach to all logical buyers, and the chance for any topping bidder to have the support of Mr. Dell’s own votes … .’”
Delaware Supreme Court Further Clarifies Appraisal Principles Applicable to Public Company Buy-Outs, Clifford Chance. “[Dell], and the Court’s earlier DFC decision, have reshaped the law governing exercises of statutory appraisal rights in public company buy-outs.”