The Delaware Supreme Court has scheduled the case of Huff Fund Investment Partnership v. CKx Inc. for en banc review in February 2015.
The Chancery Court rejected the valuation methods proposed by the parties and deferred to the merger price as the only reliable indicator of value. The Chancery Court likewise rejected the shareholders’ argument for an upward adjustment to the merger price as well as the company’s argument for a downward adjustment.
On appeal, the parties are asking the Supreme Court to consider whether the Chancery Court erred by:
- deferring exclusively to the merger price, in lieu of performing any valuation analysis, to determine the stock’s fair value.
- rejecting both of the DCF valuations presented by the shareholders as well as the company.
- rejecting the shareholders’ other valuation methodologies; namely, their expert’s (a) guideline publicly-traded companies analysis and (b) precedent transactions valuation.
- refusing to attribute any value to a corporate acquisition that materialized after the merger price was agreed upon but prior to the time the merger was consummated.
- refusing to decrease the merger price by certain claimed synergies and other cost-savings that the acquirer expected to achieve.
- refusing to allow the company to make a partial payment to the shareholders to stop the running of statutory interest prior to the entry of final judgment.
The Supreme Court seldom reviews appraisal cases en banc. In fact, the seminal cases of Weinberger v. UOP, Inc. (1983) and M.G. Bancorporation, Inc. v. Le Beau (1999) are the only other en banc appraisal cases of which we are aware.
**Note: this law firm is of counsel to the appellant-petitioner shareholders in CKx.
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