Delaware Chancery Court Once Again Defers to Merger Price in Appraisal Proceeding (Part 1)

March 20, 2017
Christopher N. Kelly and Mathew A. Golden
Corporate Counsel Weekly

Under Delaware law, stockholders of a corporation acquired in certain mergers or consolidations who satisfy applicable statutory requirements are entitled to an appraisal by the chancery court of the "fair value" of their stock in the acquired company. Because an appraisal petitioner need not own the appraised stock at the time a merger agreement is signed, and because of the above-market interest generally available under the appraisal statute, opportunistic hedge funds in recent years have increasingly used appraisal as an investment strategy, buying large numbers of shares in target corporations after the announcement of mergers for the sole purpose of pursuing appraisal. As a result, there has been a marked upsurge in appraisal litigation of late.

Click here to read Part 2 of this article published on March 22, 2017.

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