Discounted Cash Flow Analysis

Commentary on the recent Jarden decision has focused, unsurprisingly, on the use of unaffected stock price in the decision after some commentators viewed the methodology as dead after Aruba.  As a recap, unaffected stock price methodology involves determining the fair value of an acquired company using its stock price before the merger announcement.

By a July 19, 2019 ruling, Vice Chancellor Slights set the fair value of Jarden Corporation at its unaffected market price of $48.31, below the $59.21 per share value of cash and stock that Newell Rubbermaid had paid to acquire it. The court also performed a DCF analysis that corroborated its valuation. The court

The Cornerstone Report finds that despite concerns over “the subjectivity of DCF models,” the methodology remains the primary tool for valuing targets in a Delaware appraisal. Petitioners continue to “overwhelmingly” rely on DCF analyses (94% of the cases) while occasionally also providing a comparables analysis (35% of the cases). Respondents continue to rely on DCF

Vice Chancellor Glasscock issued yesterday this AOL ruling on reconsideration, lowering his prior $48.70 determination to $47.08 — going farther below the $50 merger price — on the basis that he had overvalued one of AOL’s pending transactions in his DCF analysis.

The court prefaced its ruling by expressing its displeasure at both parties

The Delaware Court of Chancery just issued two new appraisal rulings:

  1. Solera (C. Bouchard): the Court awarded merger price less synergies, which comes out to 3.4% below deal price; we have previously reported on the Solera case here; and
  2. Norcraft (V.C. Slights): the Court awarded a premium of 2.5% above deal price,

On April 23, 2018, the Delaware Supreme Court affirmed last July’s Chancery court ruling in the Clearwire case.  This decision ends the appeal by Clearwire shareholders looking to overturn the lower court decision finding that Clearwire was worth $2.13 per share, below the $5 merger price. When the Supreme Court, or any appellate court,

In this article, Fried Frank LLP attorneys discuss the three appraisal decisions since the Delaware Supreme Court’s decision in Dell Aruba, AOL and SWS. The article notes that while the Supreme Court in Dell directed the Chancery Court to consider the deal price and accord it appropriate weight, these three decisions

On Friday, Vice Chancellor Glasscock issued his ruling in the AOL appraisal case. The court first set out to determine whether the merger transaction was “Dell Compliant,” which the Court defined to be “[w]here information necessary for participants in the market to make a bid is widely disseminated, and where the terms of the transaction

The Delaware Supreme Court issued its highly-anticipated ruling today in the Dell appraisal case, reversing and remanding the trial court’s 28% premium awarded to the stockholders.  In sum, the court held that where a company is sold in a pristine M&A auction process, the chancery court must give the merger price “heavy weight” in its