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Court of Chancery Defends Aruba Networks Appraisal Decision

Posted In Appraisal

Verition Partners Master Fund Ltd. v. Aruba Networks Inc., C.A. No. 11448-VCL (Del. Ch. May 21, 2018)

This opinion arises out of the appraisal proceeding relating to Hewlett-Packard’s purchase of Aruba Networks. The case led to two notable opinions, so far. 

The first notable opinion was the Court’s original post-trial decision released in February 2018.  That decision came on the heels of the Delaware Supreme Court’s reversals in DFC Global and Dell.  Each of those reversals reaffirmed that the deal price for an arm’s-length transaction achieved after a thorough sale process likely will be the best evidence of fair value in an appraisal proceeding.  In the first Aruba Networks decision, the Court did not defer to the merger price.  Rather, discounting for synergies, it determined Aruba Networks’ fair value using the thirty-day average unaffected market price ($17.13 per share), a price well below the merger price ($24.67 per share).  It was a significant loss for the appraisal petitioners in this action with potential far-reaching consequences for other petitioners. The decision has been widely-reported and hotly-debated since.  

The second notable decision is the instant one.  Here, the Court denies the petitioners’ motion for reargument and thoroughly defends its original decision’s reasoning, with enhanced discussion of DFC Global and Dell.  The Court takes on many contentions, including some blunt ones, such as “[the Vice Chancellor] misapprehended the law due to [his] "frustration with many of the Supreme Court’s pronouncements.’”

Tags: Appraisal