South African firm Cliffe Dekker Hofmeyr (CDH) has published this analysis discussing the mechanics of South African appraisal – a jurisdiction we’ve covered multiple times before. The relatively new appraisal remedy in that country is maturing quickly as courts continue to grapple with various appraisal issues. In the most analysis, CDH discusses a case where a shareholder dissents from the merger, ‘demanded’ appraisal by instituting an appraisal application for determination of fair value, but then withdrew the application based on legal advice they received about ‘standing’ (or similar). In the process, the shareholders (or at least alleged-shareholders) allowed the Company’s fair value offer lapse. Could these alleged-shareholders, who withdrew their appraisal application, step back into their old position – basically, be ‘reinstated’ to their rights despite the fact that the Board’s offer lapsed? Yes, the Court said, according to CDH – the relevant statute did not remove rights of dissenters even if they rejected (or let lapse) the board’s offer.
While South African appraisal law obviously has its own twists and turns (and note that Lowenstein Sandler LLP does not practice in South Africa), some of the procedural aspects of this case harken to a little noticed provision of Delaware appraisal law: the “60 day option.” In sum, a stockholder may dissent, demand appraisal rights, and if they do not file a petition (or join an appraisal proceeding as a named party), they can withdraw their appraisal demand within 60 days and receive merger consideration. This 60 day option can be powerful – Carl Ichan used it to great effect with Dell – both as a chance to do further investigation and also to better understand the landscape of dissent.
*Lowenstein Sandler LLP does not practice in South Africa.