Following the Delaware Supreme Court’s appraisal decisions in Aruba, Dell and DFC, the Delaware Court of Chancery relied exclusively on market-based metrics to determine fair value in three recent appraisal decisions. In both In re Appraisal of Columbia Pipeline Group, Del. Ch. Aug. 12, 2019), and In re Appraisal of Stillwater Mining, (Del. Ch. Aug. 21, 2019), the court found that deal price was the most reliable indicator of fair value. In In re Appraisal of Jarden, (Del. Ch. July 19, 2019), the court relied on unaffected market price to determine fair value. Heeding the Delaware Supreme Court’s caution against using the DCF methodology when market-based indicators are available, the court in each case declined to give weight to DCF valuations. An analysis of the facts and takeaways from these recent opinions follows.

‘Columbia Pipeline Group’

In CPG, the court held that the deal price was the most reliable indicator of fair value because the deal process was characterized by the following objective indicia of reliability:

  • The merger was an arm’s-length transaction with a third party.
  • CPG’s board did not labor under any conflicts of interest.
  • TransCanada conducted due diligence and received confidential insights about CPG’s value.
  • CPG contacted other potential buyers pre-signing, and those parties failed to pursue a merger when they had a free chance to do so.
  • CPG negotiated with TransCanada and extracted multiple price increases; and
  • No bidders emerged during the post-signing phase.

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