Legal news site Law360 ran this analysis [$$$] of Aruba, focusing on whether the decision should be seen as a fight between valuation methodologies, or between two courts trying to fulfill their respective roles. The Chancery Court, left to apply the Delaware Supreme Court’s precedent to complex fact situations and manage cases from their infancy through decision, may be struggling with the Dell and DFC decisions. The Supreme Court, perhaps reconsidering some of the positions it held as law in Dell and DFC, is left to ‘police’ the lower court as that court struggles to apply sometimes conflicting rules and views.
As the diverse reactions to Aruba consider, no doubt scholars will analyze the decision (and decisions still to come) as part of both the evolution of appraisal law, but also in how lower courts and higher courts interact.
Yes – at least according to Professors Korsmo and Myers. In this piece from the HLS Forum on Corporate Governance, the Professors argue that the Aruba decision continued a trend of the Delaware Supreme Court misapplying certain modern finance concepts, starting most glaringly in Dell and DFC, and with Aruba only slowly turning the ship back towards a truer course. The Professors argue that the decision makes four errors: (1) failing to differentiate between how diversified and undiversified investors price risk; (2) misapplying market efficiency concepts in particular the difference between a market for an entire company versus the market for a share of the company; (3) conflating meeting fiduciary obligations with the factors suggesting an environment of pricing efficiency; and (4) viewing valuation as a mechanical exercise, while it must contain some human judgment.
Professors Korsmo and Myers are two of the most respected names in the arena analyzing appraisal rights – we’ve written about their work on a number of occasions.
From Deallawyers.com, observing that the decision can be read as a pretty direct rebuke to the lower Court, and focusing on the Delaware Supreme Court’s finding that the lower court decision appeared “results-oriented.”
From Bloomberg Law, arguing that Aruba harms appraisal arbitrage (despite rejecting unaffected stock price), but concluding that “ . . . the court’s decision, which narrowly applied to the facts in the Aruba case, raises questions because it doesn’t settle the dispute on how much weight to give the market price” and “. . . raises questions about when and where to use them, or what kind of evidence is needed[.]”
From Business LawProf Blog, discussing how Aruba fits with Dell and DFC in how one figures out what the real purpose of the remedy is.
From Reuters, on how Aruba may hurt appraisal arbitrage.
The Bloomberg article “Appraisal Arbitrage Makes a Comeback” analyzes the Aruba decision in comparison to other prominent appraisal cases.
The Financial Times [$$] reported on the Delaware Supreme Court’s ruling addressing the efficient markets hypothesis in an article analyzing the Aruba decision.
The Delaware Supreme Court reversed the Chancery Court in the highly-watched Aruba Networks case.
Read the decision here.
We will cover Aruba commentary as it comes out.
The Delaware Supreme Court held oral argument this morning on the Aruba appeal. The full argument can be watched here. The judges remained silent throughout the argument and did not put a single question to the lawyers, offering no insight as to what the Court might be thinking. We are standing by for a ruling and will post it here when available.