Monthly Archives: April 2019

In an extraordinary decision as notable for its criticisms of the trial court judge as its contributions to Delaware appraisal jurisprudence, the Delaware Supreme Court in Verition Partners Master Fund Ltd. v. Aruba Networks, Inc. reversed a decision of the Delaware Court of Chancery in a statutory appraisal proceeding. The lower court had relied on the 30-day unaffected stock price to determine that $17.13 per share was the fair value of Aruba Networks, Inc. at the time of its acquisition by Hewlett Packard Companies (“HP”). The Supreme Court—in a unanimous per curiam decision—held that Aruba’s fair value per share was $19.10, representing the deal price minus synergies realized in the merger, and that the Court of Chancery abused its discretion by relying on the 30-day unaffected market price of Aruba’s stock before the transaction was publicly announced. In so holding, the Supreme Court remarked that the decision by the trial judge to rely exclusively on the unaffected market price—even though neither party advanced that argument until the judge broached the subject in connection with post-trial briefing—“could be seen” as a “results-oriented move to generate an odd result compelled by his personal frustration at being reversed in Dell [Inc. v. Magnetar Global Event Driven Master Fund Ltd].” The Supreme Court also clarified its holdings in DFC Global Corporation v. Muirfield Value Partners L.P. and Dell, and affirmed its longstanding recognition of merger consideration as strong evidence of fair value in statutory appraisal actions. Given the significance of the agreed-upon merger consideration in determining a company’s fair value (coupled with the requirement to reduce that amount by any synergies generated by the merger), the decision likely will further reduce the volume of appraisal arbitrage in Delaware.

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