Theodore N. Mirvis is a partner in the Litigation Department at Wachtell, Lipton, Rosen & Katz. The following post is based on a Wachtell Lipton memorandum by Mr. Mirvis, William Savitt, and Ryan A. McLeod. This post is part of the Delaware law series, which is cosponsored by the Forum and Corporation Service Company; links to other posts in the series are available here.
The Delaware Court of Chancery this week held that the “fair value” payable in a statutory appraisal proceeding was less than the merger price. LongPath Capital, LLC v. Ramtron Int’l Corp., C.A. No. 8094-VCP (Del. Ch. June 30, 2015). The decision adds to a growing body of Delaware case law confirming the importance of the market in establishing fair value in the context of increasingly frequent (and increasingly economically significant) “appraisal arbitrage” litigation.
The case arose from Cypress Semiconductor Corp.’s hostile bid for Ramtron in 2012. In response to the bid, Ramtron tested the market but no other buyers emerged. Ramtron eventually agreed to be acquired by Cypress for $3.10 per share, a substantial premium to the stock’s trading price. After the merger was announced, LongPath, a hedge fund in the business of buying appraisal claims, acquired almost 500,000 shares of Ramtron, with the purpose of bringing an appraisal action.