The Delaware Supreme Court in a per curiam opinion Tuesday categorically rejected a trial court's appraisal ruling that valued investors' shares of Aruba Networks based on the Silicon Valley wireless networking company's stock price 30 days before its 2015 sale to to The Hewlett-Packard Co. was announced.

The per curium opinion instead looked to the deal price minus synergies in valuing the firm's shares at $19.10, nearly $2 per share higher than Vice Chancellor J. Travis Laster of the Delaware Court of Chancery found last February.

The unanimous ruling from the Delaware Supreme Court's five justices came as a resounding repudiation of Laster's handling of the case, which the petitioners Verition Partners Master Fund Ltd. had criticized as a personal reaction to being overruled in the Supreme Court's landmark ruling in the separate appraisal of Dell Inc.

Laster has denied those allegations, saying the decision was his best attempt to work through an “unprecedented shift” in Delaware's approach to appraisal cases, triggered by the Supreme Court's landmark rulings in Dell and the a case known as DFC, both of which signaled a strong preference for deal price as the best indicator of fair value when there is an unhindered, informed and competitive sales process.

In the Aruba case, neither Verition nor Aruba had claimed the company's pre-announcement stock price as the best measure of fair value at the time of the merger. Laster, however, called for supplemental briefing on the attributes of Aruba's stock after the Supreme Court returned its Dell ruling in December 2017 and later penned his opinion, navigating the complexities of the post-Dell and DFC landscape.

However, the Supreme Court on Tuesday dismissed those writings as dicta and rather focused on the question of whether Laster abused his discretion by arriving at the unaffected market price as the fair value of the appellants' shares.

“Because the Court of Chancery's decision to use Aruba's stock price instead of the deal price minus synergies was rooted in an erroneous factual finding that lacked record support, we answer that in the positive and reverse the Court of Chancery's judgment,” the court said.

According to the high court, it was Laster himself who raised the idea of awarding the petitioners Aruba's stock price, causing Aruba to drop its original deal-price-minus-synergies valuation. Laster's ruling ultimately relied exclusively on the stock price because he thought he would need to deduct ”reduced agency costs” from the deal price to arrive at a figure reflecting Aruba's value as a going concern.

The justices, however, panned that analysis as having no basis in either the court record or corporate financial literature, saying there was no reason to believe that Aruba was cheating itself by not fully accounting for expected synergies in the deal.

“Applying the going-concern standard, we hold that the Court of Chancery abused its discretion in using Aruba's 'unaffected market price' because it did so on the inapt theory that it needed to make an additional deduction from the deal price for unspecified 'reduced agency costs,'” they wrote in the ruling. “It appears to us that the Court of Chancery would have given weight to the deal price minus synergies absent its view that it also had to deduct unspecified agency costs.”

But the 25-page opinion also roundly rejected Laster's reading of Dell and DFC as a novel departure from long-held positions on the efficiency of markets.

“Like any human perspective, the trial judge's broader reading of Dell and DFC is arguable, but the trial judge's sense that those decisions somehow compelled him to make the decision he did was not supported by any reasonable reading of those decisions or grounded in any direct citation to them,” the opinion said.

“The apparent novelty the trial judge perceived is surprising, given the long history of giving important weight to market-tested deal prices in the Court of Chancery and this court, a history that long predated the trial judge's contrary determination in Dell.”

Beyond those errors, the court said, Laster had “injected due process and fairness problems” into the proceedings by introducing the issue of Aruba's stock price so late in the proceedings, without the benefit of pretrial discovery, expert depositions, testimony and cross-examination at trial.

“The lack of that process here as to the vice chancellor's ultimate remedy is troubling,” the justices said.

Michael P. Kelly, who represented Aruba, said the Supreme Court's ruling highlighted the importance of deal price minus synergies evidence in appraisal trials, but also defended Laster's ruling as the “product of a logical and deductive process.”

“This case is unique in that trial occurred before DFC and Dell were decided. But the trial court, to his credit, invited three rounds of post-trial briefing and gave the parties every opportunity to make their arguments post-Dell/DFC,” said Kelly, chairman of McCarter & English.

An attorney for Verition did not return a call Tuesday seeking comment on the ruling.

The case is captioned Verition Partners Master Fund v. Aruba Networks.