New Activist Weapon — A Look At Appraisal Arbitrage Cases

Law360, New York (August 7, 2014, 10:36 AM EDT) -- Delaware appraisal actions are on the rise, primarily due to the new and expanding phenomenon of "appraisal arbitrage" — in which shareholder activists and hedge funds acquire target shares after a merger is announced and focus on asserting appraisal claims as a kind of investment in and of themselves.

From 2004 through 2010, the number of appraisal petitions filed in Delaware rose and fell roughly in parallel with the overall level of merger activity, with appraisal rights being asserted in about 5 percent of the transactions for which they were available. In 2011, however, the rate of petitions more than doubled...

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