Stillwater Appraisal: Delaware Supreme Court Affirms Chancery Court Reliance on Deal Price in Determining “Fair Value”
Robert S. Reder & Chutian Wang | 74 Vand. L. Rev. En Banc 253 (2021) |
Under Section 262 of the Delaware General Corporation Law (“DGCL § 262”), a stockholder unhappy with the consideration payable in a merger is entitled to dissent from the transaction and seek a Delaware Court of Chancery (“Chancery Court”) appraisal of the “fair value” of the stockholder’s shares. As the Delaware Supreme Court (“Supreme Court”) explained in Brigade Leveraged Cap. Structures Fund Ltd. v. Stillwater Mining Co., 240 A.3d 3 (Del. 2020) (“Stillwater”), “[t]o reach this per-share valuation, the court should first envisage the entire pre-merger company as a ‘going concern[ ]’ . . . and assess its value [on the closing date of the merger] . . . .” In this connection, the Chancery Court “has discretion to select one of the parties’ valuation models as its general framework or to fashion its own.” Ultimately, however, the Chancery Court “must determine fair value, and ‘fair value is just that, “fair.” It does not mean the highest possible price that a company might have sold for.’”
AUTHORS:
Robert S. Reder & Chutian Wang