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Norcraft Appraisal: Chancery Court Gives No Weight to Deal Price Negotiated in a Conflicted CEO-Led Transaction with a Flawed Sales Process

Posted by on Tuesday, April 21, 2020 in Delaware Corporate Law Bulletins, En Banc.

Robert S. Reder & Szymon S. Barnas | 73 Vand. L. Rev. En Banc. 93 (2020) |

“[I]n Blueblade Capital Opportunities LLC v. Norcraft Companies, Inc., No. CV 11184-VCS, 2018 WL 3602940 (Del. Ch. July 27, 2018) (hereinafter “Norcraft Appraisal Action”), the Chancery Court determined that neither the deal price produced by the sales process employed by the target company’s board of directors, nor the target company’s public trading price, was a reliable indicator of the fair value of the target company’s shares. Instead, the Chancery Court used its own DCF analysis to determine fair value. Norcraft Appraisal Action helpfully analyzes the flaws in a sale process—especially during a post-signing go-shop period—that can spur the Chancery Court to discount, or even give no weight to, negotiated deal price in determining fair value for purposes of DGCL § 262.”

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