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Court of Chancery sanctions use of asset approach in complex appraisal case

A low-profile appraisal case in front of the Delaware Court of Chancery raised important valuation questions, including how the court should determine the fair value of a nonoperating entity and how it should deal with the value of claims both parties brought on behalf of the company prior to the contested merger.

In re Happy Child World, Inc.

In an entire-fairness-cum-statutory-appraisal case involving nonoperating day care center whose facility was leased on merger date, court approves use of capitalization of earnings and NAV models and averaging results to determine fair value; business model was uncertain on merger date, court notes.

Uncertain Business Model on Merger Date Justifies Use of Income and NAV Models, Court Says

In an entire-fairness-cum-statutory-appraisal case involving nonoperating day care center whose facility was leased on merger date, court approves use of capitalization of earnings and NAV models and averaging results to determine fair value; business model was uncertain on merger date, court notes.

Court Allows Tesla Dissenting Shareholder Suit to Go Forward

Court of Chancery says Tesla dissenting shareholders allege sufficient facts to show company CEO, Elon Musk, was a controlling shareholder, despite holding a minority interest; court allows breach of fiduciary claims concerning acquisition of related company to proceed.

In re Tesla Motors Stockholder Litig.

Court of Chancery says Tesla dissenting shareholders allege sufficient facts to show company CEO, Elon Musk, was a controlling shareholder, despite holding a minority interest; court allows breach of fiduciary claims concerning acquisition of related company to proceed.

Court Validates Use of IPO Valuation in Fair Value Proceeding

In shareholder suit involving pharmaceutical startup with uncertain prospects, appeals court upholds trial court’s rejection of expert testimony based on “traditional” valuation methods in favor of noncontemporary IPO valuation to determine fair value.

Court Validates Use of IPO Valuation in Fair Value Proceeding

In shareholder suit involving pharmaceutical startup with uncertain prospects, appeals court upholds trial court’s rejection of expert testimony based on “traditional” valuation methods in favor of noncontemporary IPO valuation to determine fair value.

Kottayil v. Insys Therapeutics, Inc.

In shareholder suit involving pharmaceutical startup with uncertain prospects, appeals court upholds trial court’s rejection of expert testimony based on “traditional” valuation methods in favor of noncontemporary IPO valuation to determine fair value.

Proxy Disclosed Sufficient Valuation Data to Allow Informed Vote on Merger

Chancery says proxy gave disinterested shareholders sufficient information about valuation analysis underlying financial advisor’s fairness opinion to enable informed vote, and it dismisses breach-of-fiduciary-duty claims under business judgment rule.

Proxy Disclosed Sufficient Valuation Data to Allow Informed Vote on Merger

Chancery says proxy gave disinterested shareholders sufficient information about valuation analysis underlying financial advisor’s fairness opinion to enable informed vote, and it dismisses breach-of-fiduciary-duty claims under business judgment rule.

In re Merge Healthcare Inc. Stockholders Litigation

Chancery says proxy gave disinterested shareholders sufficient information about valuation analysis underlying financial advisor’s fairness opinion to enable informed vote, and it dismisses breach-of-fiduciary-duty claims under business judgment rule.

Corwin v. KKR Fin. Holdings LLC

Regarding breach of fiduciary duty claims, Delaware Supreme Court says business judgment rule (lower standard of review) applies where disinterested stockholder majority approves merger with third party and vote was uncoerced and fully informed.

Valuations Underpin DE Chancery’s Ruling in Going-Private Merger

DE Supreme Court affirms use of business judgment review where controlling stockholder buyout includes two procedural protections for minority and finds valuations from independent financial advisor confirmed merger was favorable to minority stockholders.

Valuations Underpin DE Chancery’s Ruling in Going-Private Merger

DE Chancery adopts business judgment review standard where controlling stockholder buyout includes two procedural protections for minority and finds valuations from independent financial advisor demonstrate merger was favorable to minority stockholders.

Kahn v. M&F Worldwide Corp.

DE Supreme Court affirms use of business judgment review where controlling stockholder buyout includes two procedural protections for minority and finds valuations from independent financial advisor confirmed merger was favorable to minority stockholders.

In re MFW Shareholders Litig.

DE Chancery adopts business judgment review standard where controlling stockholder buyout includes two procedural protections for minority and finds valuations from independent financial advisor demonstrate merger was favorable to minority stockholders.

Short-form Merger Not Subject to 'Entire Fairness' Standard

In this class action, plaintiffs, who were minority shareholders of a subsidiary corporation, Unocal Exploration Corp., filed suit against the parent corporation, Unocal, and its directors.

Glassman v. Unocal Exploration Corp.

At issue is the fiduciary duties owed by a parent corporation to the subsidiary’s minority stockholders in the context of a "short-form" merger.

Protect clients against liability in buyout deals

I never cease to be amazed at the huge damage awards in breach of fiduciary duty liability suits in conjunction with company buyouts. Most of these awards could have been prevented. Last issue we ha ...

Adjudicating statutory appraisal and breach of fiduciary duty valuations

Vice Chancellor Jack B. Jacobs has served on the Delaware Court of Chancery for 14 years, and has written many widely quoted opinions in shareholder dispute cases. In this interview, he offers some ...

'Entire Fairness' Needed for Exclusive Appraisal Remedy

Judge Jacobs denied a motion for summary judgment to dismiss a class action suit and allow plaintiffs only the appraisal remedy.

Seagraves v. Urstadt Property

At issue is the plaintiffs claim that the PUMG directors breached their fiduciary duties by engaging in unfair dealing and by violating their duty of disclosure in connection with the merger.

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