Highlights of 2019 Delaware Valuation Decisions
This year to date has been another active period for valuation cases in the Delaware courts. Six cases are reviewed and the predominant theme is that, in arm’s-length transactions, appraisal value continues to be based primarily on the transaction price rather than on discounted cash flow.
Columbia Pipeline ruling highlights terminal value flaw in expert’s DCF
In the Columbia Pipeline statutory appraisal action, the Delaware Court of Chancery recently rejected the petitioner expert’s discounted cash flow analysis to determine fair value and, in a short but noteworthy discussion, explained why the court has come to question the usefulness of the DCF in many instances.
Deal price prevails in yet another Delaware statutory appraisal ruling
Nine days after his ruling in Columbia Pipeline, Vice Chancellor Laster again found the deal price was the most reliable indicator of fair value in a statutory appraisal case involving a publicly traded mining company.
In re Appraisal of Jarden Corp. (II)
Responding to petitioners’ motion for reargument, court concedes and corrects errors in court’s original DCF analysis but finds corrected DCF model still corroborates the original fair value determination; court affirms its reliance on unaffected market price as fair value indicator.
Court Says Corrected DCF Still Supports Original Fair Value Determination
Responding to petitioners’ motion for reargument, court concedes and corrects errors in court’s original DCF analysis but finds corrected DCF model still corroborates the original fair value determination; court affirms its reliance on unaffected market price as fair value indicator.
Unadjusted deal price best represents fair value, Court of Chancery says
In a statutory appraisal case featuring a publicly traded company, the Court of Chancery, after an exhaustive evaluation of the sale process, found the deal price was the best evidence of fair value.
In re Stillwater Mining Co. 2017 0385 JTL
In statutory appraisal of public company, court relies on deal price; presigning sale process was “suboptimal,” but post-signing market check was “effective”; there was an argument for upward adjustment to deal price based on an increase in the company’s value between merger announcement and deal closing.
Despite Less-Than-Optimal Sale Process, Court Relies on Deal Price for Fair Value
In statutory appraisal of public company, court relies on deal price; presigning sale process was “suboptimal,” but post-signing market check was “effective”; there was an argument for upward adjustment to deal price based on an increase in the company’s value between merger announcement and deal closing.
In re Appraisal of Columbia Pipeline Grp., Inc.
In statutory appraisal action featuring publicly traded company, court relies on deal price for fair value; although flawed, sale process, when compared to process in three key high court decisions endorsing deal price, does not undermine validity of deal price; no adjustment for synergies.
Court Endorses Unadjusted Deal Price as Fair Value Indicator Despite Flaws in Sale Process
In statutory appraisal action featuring publicly traded company, court relies on deal price for fair value; although flawed, sale process, when compared to process in three key high court decisions endorsing deal price, does not undermine validity of deal price; no adjustment for synergies.
Court of Chancery favors unaffected market price over other fair value indicators (Part 2)
When the Delaware Court of Chancery recently decided to rely on the unaffected market price for fair value, in a major statutory appraisal case, it provided an in-depth critique of the experts’ traditional valuation analyses, which valuators want to be familiar with.
Court of Chancery favors unaffected market price over other fair value indicators (Part 1)
In a freshly minted ruling, the Delaware Court of Chancery said the unaffected market price was the most reliable indicator of fair value in a big statutory fair value case.
In re Appraisal of Jarden Corp. (I)
Court finds record shows unaffected market price is best evidence of fair value; court says company expert’s efficient market analysis and event study provide strong support for use of market price; court’s own DCF analysis generates value close to market price, thus corroborating market price.
Court of Chancery Rules Unaffected Market Price Is Best Evidence of Fair Value
Court finds record shows unaffected market price is best evidence of fair value; court says company expert’s efficient market analysis and event study provide strong support for use of market price; court’s own DCF analysis generates value close to market price, thus corroborating market price.
Verition Partners Master Fund Ltd. v. Aruba Networks, Inc. (Aruba III)
Delaware Supreme Court overturns Court of Chancery’s fair value determination based on unaffected market price and awards petitioners deal price minus synergies as determined by company; trial court’s analysis rested on “inapt” agency-costs theory and raised due process and fairness concerns.
Delaware Supreme Court Reproves Chancery’s Use of Unaffected Market Price in Aruba
Delaware Supreme Court overturns Court of Chancery’s fair value determination based on unaffected market price and awards petitioners deal price minus synergies as determined by company; trial court’s analysis rested on “inapt” agency-costs theory and raised due process and fairness concerns.
Kendall Hoyd & Silver v. Trussway Holdings
Delaware Court of Chancery finds DCF analysis is the best way to achieve fair value in a statutory appraisal case arising out of a contested merger; court’s analysis leans heavily on company expert’s analysis regarding contested inputs, including projections, beta, and terminal value.
Court Chooses DCF to Determine Fair Value in ‘Straightforward’ Appraisal Case
Delaware Court of Chancery finds DCF analysis is the best way to achieve fair value in a statutory appraisal case arising out of a contested merger; court’s analysis leans heavily on company expert’s analysis regarding contested inputs, including projections, beta, and terminal value.
Tennessee embraces ‘modern’ valuation methods in fair value determination
In a key valuation decision, the Tennessee Supreme Court recently overruled precedent on how to determine fair value in a dissenting shareholder suit.
Mesirov v. Enbridge Energy Co.
In dispute over related-party transaction, court upholds aiding and abetting claim against financial advisor; plaintiffs produced enough facts to show fairness opinion ignored most relevant precedent transaction and other valuation metrics indicating the buyer was overpaying for contested asset.
Fairness Opinion Triggers Viable Aiding and Abetting Claim Against Financial Advisor
In dispute over related-party transaction, court upholds aiding and abetting claim against financial advisor; plaintiffs produced enough facts to show fairness opinion ignored most relevant precedent transaction and other valuation metrics indicating the buyer was overpaying for contested asset.
Virginia court nixes challenge to appraisal done according to valuation agreement
In the category of buyout disputes notwithstanding a valuation agreement, a recent Virginia case stands out for showing the evidentiary hurdle a challenger must overcome to defeat a third-party appraisal done in accordance with a controlling agreement.
In re Appraisal Solera Holdings, Inc.
In an appraisal proceeding, the Chancery finds the deal price minus synergies provides the best evidence of fair value; court says there was an efficient market and the sales process, though not perfect, was able to deliver the value generated in an arm’s-length transaction.
Delaware Chancery Says Reasonably Sound Sales Process Delivered Fair Value
In an appraisal proceeding, the Chancery finds the deal price minus synergies provides the best evidence of fair value; court says there was an efficient market and the sales process, though not perfect, was able to deliver the value generated in an arm’s-length transaction.
Blueblade Capital Opportunities LLC v. Norcraft Cos.
Chancery rejects deal price as indicator of fair value, citing problematic sales process, and rejects use of unaffected trading price, citing company’s lack of trading history; court instead relies on its own DCF analysis, drawing on the most credible aspects of each expert’s analysis.