In re Appraisal of SWS Group, Inc.
In statutory appraisal, Chancery relies solely on DCF analysis, noting the instant case involving a bank holding company raises a unique situation in terms of management projections and whether and how to account for creation of excess regulatory capital.
Chancery’s DCF Upends Appraisal Arbitrage Strategy
In statutory appraisal, Chancery relies solely on DCF analysis, noting the instant case involving a bank holding company raises a unique situation in terms of management projections and whether and how to account for creation of excess regulatory capital.
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 PetSmart, Inc.
In statutory appraisal, Chancery decides to “defer” to deal price, citing a robust sales process and well-functioning market; petitioners’ DCF analysis was not a useful valuation tool where it was based on, “at best, fanciful” management projections.
‘Fanciful’ Projections Make DCF an Unreliable Tool in Appraisal Proceeding
In statutory appraisal, Chancery decides to “defer” to deal price, citing a robust sales process and well-functioning market; petitioners’ DCF analysis was not a useful valuation tool where it was based on, “at best, fanciful” management projections.
Chancery Says Solid Sales Process Lends Credibility to Deal Price
In appraisal action, Chancery says final merger consideration best represents fair value, noting sales process led to “meaningful price discovery”; court says with DCF too much depends on assumptions; small changes may have outsize impact on value range.
Judicial Appraisal Lacks Valuation Evidence and Gets Dinged on Appeal
Appeals court scraps judicial appraisal, finding it was not based on competent evidence; in valuing dissenting shareholder’s interest in auto dealership, trial court ignored expert opinions but failed to detail methodology supporting its valuation.
Trustee’s Attack on Merger Projections Fails to Resonate With Court
Court says trustee fails to show debtor was insolvent under any applicable financial condition tests; contemporaneous industry analysis and valuations by financing banks belie claim that management projections in support of merger were unreasonable.
Weisfelner v. Blavatnik (In re Lyondell Chem. Co.)
Court says trustee fails to show debtor was insolvent under any applicable financial condition tests; contemporaneous industry analysis and valuations by financing banks belie claim that management projections in support of merger were unreasonable.
Merger valuation disclosures were adequate. Chancery applies business judgment rule to breach of fiduciary duty action
The business judgment rule has featured prominently in a number of recent breach of fiduciary duty cases in front of the Delaware Court of Chancery. Under the rule, the court must not interfere in a transaction if a majority of the minority shareholders approved the deal and the vote was “uncoerced and fully informed.”
Court of Appeals Sides With Taxpayers on Right to Vet IRS Expert Valuation
Court of Appeals finds Tax Court held mistaken view of burden of proof and erred in declining to evaluate taxpayers’ multiple challenges to IRS’s expert valuation; on remand, Tax Court may consider new valuation evidence, appeals court says.
Tennessee Sticks With Delaware Block Method in Judicial Appraisals
Appeals court says trial court followed applicable law when it used Delaware block method to determine fair value of dissenting shareholders’ interests; court declines to change law on valuation, saying reversal must come from state Supreme Court.
Chancery Bases Fair Value Calculation on Income-Based Model
Flawed sales process makes merger price an unreliable indicator of fair value for statutory appraisal, Chancery finds; in accord with party experts, court uses discounted net income approach and adopts most of respondent expert’s inputs for its valuation.
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.
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.
Chancery Recognizes Reality of Control Premium in Third-Party Offers
Court says special committee’s accepting controlling shareholder’s lower bid over third-party’s higher offer is not sign of bad-faith dealing but of reality that “buyers of corporate control will be required to pay a premium” to acquire the whole company.
Shareholder Approval ‘Cleanses’ Potential Undervaluation
Per business judgment rule, court dismisses shareholder complaint that board members breached fiduciary duties by rushing to sell entire company where financial advisor had stated separate sales of company’s various business units would maximize value.
Chancery relies on income approach to determine fair value in problematic bank merger
In a statutory appraisal action, the Delaware Court of Chancery recently found the deal price did not reflect fair value because the sales process was suboptimal. Certain other methods the parties' experts used also were inadequate to the task, the court said.
Judicial Appraisal Lacks Valuation Evidence and Gets Dinged on Appeal
Appeals court scraps judicial appraisal, finding it was not based on competent evidence; in valuing dissenting shareholder’s interest in auto dealership, trial court ignored expert opinions but failed to detail methodology supporting its valuation.
Lally Orange Buick Pontiac GMC, Inc. v. Sandhu
Appeals court scraps judicial appraisal, finding it was not based on competent evidence; in valuing dissenting shareholder’s interest in auto dealership, trial court ignored expert opinions but failed to detail methodology supporting its valuation.
Merion Capital L.P. v. Lender Processing Servs.
In appraisal action, Chancery says final merger consideration best represents fair value, noting sales process led to “meaningful price discovery”; court says with DCF too much depends on assumptions; small changes may have outsize impact on value range.
Chancery Says Solid Sales Process Lends Credibility to Deal Price
In appraisal action, Chancery says final merger consideration best represents fair value, noting sales process led to “meaningful price discovery”; court says with DCF too much depends on assumptions; small changes may have outsize impact on value range.
Chancery says bids in squeeze-out merger are not comparable
The Delaware Court of Chancery recently cut short a challenge to a going-private merger when it dismissed the plaintiffs' complaint. The plaintiffs unsuccessfully argued the defendants breached their fiduciary duties when they favored the controller's lower bid over a third-party bidder's higher offer.
Chancery Relies on ‘Simple and Powerful’ DCF for Fair Value
Chancery finds gap separating fair value determinations of three valuation experts in a merger involving a privately held company “alarmingly” wide; court says only the DCF, “a simple and powerful concept,” achieves a reliable indicator of fair value.
Cavallaro v. Commissioner (Cavallaro II)
Court of Appeals finds Tax Court held mistaken view of burden of proof and erred in declining to evaluate taxpayers’ multiple challenges to IRS’s expert valuation; on remand, Tax Court may consider new valuation evidence, appeals court says.