Yes – at least according to Professors Korsmo and Myers. In this piece from the HLS Forum on Corporate Governance, the Professors argue that the Aruba decision continued a trend of the Delaware Supreme Court misapplying certain modern finance concepts, starting most glaringly in Dell and DFC, and with Aruba only slowly turning the ship back towards a truer course. The Professors argue that the decision makes four errors: (1) failing to differentiate between how diversified and undiversified investors price risk; (2) misapplying market efficiency concepts in particular the difference between a market for an entire company versus the market for a share of the company; (3) conflating meeting fiduciary obligations with the factors suggesting an environment of pricing efficiency; and (4) viewing valuation as a mechanical exercise, while it must contain some human judgment.
Professors Korsmo and Myers are two of the most respected names in the arena analyzing appraisal rights – we’ve written about their work on a number of occasions.
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