The Most Recent Appraisal Decisions (One Above, and One Below, the Deal Price) Should Further Discourage Appraisal Claims in Arm’s-Length Merger Cases—<em>Norcraft</em> and <em>Solera</em>

The Most Recent Appraisal Decisions (One Above, and One Below, the Deal Price) Should Further Discourage Appraisal Claims in Arm’s-Length Merger Cases—Norcraft and Solera


By: Andrew J. Colosimo, Warren S. de Wied, Steven Epstein, Christopher Ewan, Arthur Fleischer, Jr., Andrea Gede-Lange, David J. Greenwald, Randi Lally, Mark H. Lucas, Scott B. Luftglass, Brian T. Mangino, Philip Richter, Robert C. Schwenkel, David L. Shaw, Peter L. Simmons, Matthew V. Soran, Steven J. Steinman, Gail Weinstein, Maxwell Yim

Two new Delaware appraisal decisions—Blueblade Capital Opportunities, L.P. v. Norcraft Inc. (July 27, 2018) and In re Appraisal of Solera, Inc. (July 30, 2018)—should further discourage appraisal claims in the context of arm's-length mergers. In Norcraft, the Court of Chancery relied on a DCF analysis, while looking to the deal price as a “reality check,” and found fair value to be 2.5% above the deal price. In Solera, the Court of Chancery relied on the deal-price-less-synergies and found fair value to be 3.4% below the deal price. Notably, while the court in neither case determined fair value to be equal to the deal price (the approach strongly embraced by the Delaware Supreme Court in its seminal Dell decision issued in late 2017), in both cases the result was close to the deal price (in our view, reflecting the impact of Dell). In the attached Fried Frank M&A/PE Briefing, we discuss how these decisions fit within the overall appraisal landscape; analyze key points from both decisions (including the court's embrace in both of the concept of deducting synergies from the deal price and the new relevance of the unaffected market price in appraisal cases); and offer practice points arising from these decisions.

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