Court Of Chancery Upholds Merger Price As Fair Value In Appraisal Action
This is another decision in the continuing development of Delaware law on how to determine the acquired company’s fair value in an appraisal action. The decision carefully reviews the more recent opinions on whether the merger price constitutes fair value, concluding that, in this case, it did. Factors considered in weighing the use of the merger price included: meaningful competition during the pre-signing phase, that adequate and reliable information was provided to all parties during the pre-signing phase, and the lack of collusion or unjustified favoritism towards particular bidders. In addition, because fair value is determined at closing, evidence from the post-signing period may also be relevant, such as the absence of a topping bid, and the company’s post-signing performance. The decision is also useful for seeing how the Court will work carefully through the parties’ competing expert reports.