In re Appraisal of Dell Inc.: The Continuing Relevance of Deal Price in Delaware Appraisal Proceedings
In a recent opinion, In re Appraisal of Dell Inc., the Delaware Court of Chancery awarded the appraisal petitioners fair value for their shares well in excess of the price paid to the other public stockholders of Dell Inc. when it was acquired via a management-led buyout in 2012. Immediately following this decision, some practitioners noted that it broke with several recent appraisal opinions in which the Court of Chancery adopted the merger consideration as the best evidence of fair value and expressed concerns that Dell might signal a shift in Delaware appraisal law away from deferring to a negotiated merger price in appraisal cases. A closer review of the decision, however, indicates there is no cause for alarm. While the Dell court did not ultimately defer to the merger consideration, the opinion’s thorough analysis of the underlying deal process should be read as affirming that Delaware courts will continue to routinely and carefully consider merger price in appraisal proceedings and "often," but not always, find that such price is representative of fair value. At most, Dell establishes that MBOs present special issues in the appraisal context and warrant careful consideration by the court when deciding whether the deal price should in influence its determination of fair value.