Richards Layton & Finger

DFC Global: Delaware Supreme Court Emphasizes Role of the Market in Certain Appraisal Proceedings

November 2017

The number of proceedings under Section 262 of the Delaware General Corporation Law (DGCL), in which stockholders who have not voted in favor of a merger and have otherwise perfected their right to seek a judicially determined assessment of the “fair value,” in cash, of their shares, has increased significantly over the past few years, providing the courts with additional opportunities to explore the appropriate methods of assessing fair value. Although Section 262 of the DGCL expressly provides that the Court of Chancery, in assessing fair value, “shall take into account all relevant factors,” a trend has emerged, principally in third-party transactions in which the target corporation was shopped, in which the Court has given significant (if not exclusive) weight to the deal price in appraising the shares subject to the proceeding.