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Delaware Supreme Court Rejects Stock Price Appraisal Award in Aruba Networks

Posted In Synergy Valuation

Verition Partners Master Fund, Ltd. v. Aruba Networks, Inc., No. 368, 2018 (Del. Apr. 17, 2019).

Image business valuationIn a closely-followed appeal from the Court of Chancery’s appraisal decision in the Aruba Networks case, the Delaware Supreme Court reversed the trial court’s fair value award of $17.13 per share and directed that the court-below enter judgment at the deal-price-less-synergies value of $19.10 per share.  The Supreme Court found that the lower court abused its discretion when, because of the difficulty of estimating the amount of the buyer’s synergy value in the $24.67 deal price, it determined that Aruba’s pre-announcement, “unaffected” stock price was the best evidence of fair value.  In so ruling, the Supreme Court provides important guidance about how to account for synergies arising from the expectation of the merger when determining the “fair value” of a going concern under Delaware’s appraisal statute in Section 262 of the DGCL. More ›