In Verition Partners Master Fund v. Aruba Networks, No. 368, 2018 (Del. Apr. 1, 2019), the Delaware Supreme Court considered whether the Delaware Court of Chancery abused its discretion in concluding that, as of the “effective date” of the merger between Aruba Networks Inc. and Hewlett-Packard Co. (HP), the “fair value” of Aruba—as defined by 8 Del. C. Section 262—was its “unaffected market price,” i.e., the average “trading price of Aruba’s stock during the 30 days before news of the merger leaked, which was three to four months prior to closing.” Holding that such a conclusion was an abuse of discretion, the Supreme Court reversed and awarded Verition Partners $19.10 per share, “reflecting the deal price minus the portion of synergies left with Aruba as estimated by … Aruba.”

As explained further below, the Supreme Court reversed the Court of Chancery’s reliance on “unaffected market price” as the exclusive measure of Aruba’s fair value for multiple reasons, including that the Court of Chancery’s rejection of a deal-price-less-synergies valuation, which it otherwise viewed as “compelling evidence of fair value,” found “no basis in the record … or corporate finance literature,” and valuing the company using “unaffected market price” prior to the announcement of the transaction conflicted with Section 262(h) of the DGCL, which requires fair value to be determined as of a qualifying transaction’s effective date.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]