Control premia are not irrelevant in Delaware statutory appraisal law, says Prof. Lawrence Hamermesh (University of Pennsylvania). Responding to a recent assertion by Prof. Steve Bainbridge that, by excluding the accomplishments or expectations of a merger from its statutory fair value standard, the Delaware courts seem to be “making up this stuff as they go along,” Hamermesh writes:
We see it differently: Control has a distinct value to the person who owns or acquires it, and it cannot be viewed as belonging to dispersed public shareholders or minority shareholders. Accordingly, and in light of the statutory exclusion [and notwithstanding the ambiguity of such precedent as Weinberger v. UOP], we believe that it’s a mistake to appraise fair value under the Delaware appraisal statute by reference to transactions that reflect payment of a premium for control.
“Disaggregated shareholders don’t have control,” Hamermesh reiterates, “and fairness doesn’t require that they be paid for what they don’t own.” To read his complete response, click here.
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