Gail Weinstein is senior counsel, and David L. Shaw and Scott B. Luftglass are partners at Fried, Frank, Harris, Shriver & Jacobson LLP. This post is based on a Fried Frank publication by Ms. Weinstein, Mr. Shaw, Mr. Luftglass, Robert C. Schwenkel, Brian T. Mangino, and Andrea Gede-Lange, and is part of the Delaware law series; links to other posts in the series are available here. Related research from the Program on Corporate Governance includes Using the Deal Price for Determining “Fair Value” in Appraisal Proceedings (discussed on the Forum here) and Appraisal After Dell, both by Guhan Subramanian.
Two new Delaware appraisal decisions—Blueblade Capital Opportunities, L.P. v. Norcraft Inc. (July 27, 2018) and In re Appraisal of Solera, Inc. (July 30, 2018)—should further discourage appraisal claims in the context of arm’s-length mergers. In Norcraft, the Court of Chancery relied on a DCF analysis, while looking to the deal price as a “reality check,” and found fair value to be 2.5% above the deal price. In Solera, the Court of Chancery relied on the deal-price-less-synergies and found fair value to be 3.4% below the deal price. Notably, while the court in neither case determined fair value to be equal to the deal price (the approach strongly embraced by the Delaware Supreme Court in its seminal Dell decision issued in late 2017), in both cases the result was close to the deal price (in our view, reflecting the impact of Dell).
