Risk Of 'Below Deal Price' Appraisal Post-Dell: Part 1

By Gail Weinstein, Steven Epstein, Robert Schwenkel and Brian Mangino (March 21, 2018, 12:31 PM EDT) -- Since the Delaware Supreme Court issued its landmark Dell appraisal decision in December 2017, the Delaware courts have issued three appraisal decisions — Verition Partners v. Aruba Networks on Feb. 15, In re Appraisal of AOL Inc. on Feb. 23, and In re Appraisal of SWS Group, affirmed by the Delaware Supreme Court on Feb. 23. In Dell, the Supreme Court held that, in the case of an arm's-length merger with a "robust" sale process, the deal price is generally the best "proxy" for appraised fair value and should be given "heavy, if not determinative weight" in determining fair value. The Supreme Court also directed that, even if the deal price were not fully reliable for determining fair value (for example, because the sale process was not fully robust), the Court of Chancery still should consider the deal price and accord it an appropriate weight. However, in Aruba and AOL, as well as previously in SWS, the Court of Chancery ascribed zero weight to the deal price and determined that fair value was below the deal price....

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