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Procedimento di appraisal e criteri di valutazione delle azioni: una pronuncia della Court of Chancery del Delaware

Giulio Sandrelli


«The petitioners owned shares of common stock of Dell Inc. (the “Company”). In 2013, the Company completed a merger that gave rise to appraisal rights (the “Merger”). The petitioners sought appraisal. Based on the evidence presented at trial, the fair value of the Company’s common stock at the effective time of the Merger was $17.62 per share.


  1. Legal Analysis

“An appraisal proceeding is a limited legislative remedy intended to provide shareholders dissenting from a merger on grounds of inadequacy of the offering price with a judicial determination of the intrinsic worth (fair value) of their shareholdings.” Cede & Co. v. Technicolor, Inc. (Technicolor I), 542 A.2d 1182, 1186 (Del. 1988). Section 262(h) of the Delaware General Corporation Law (the “DGCL”) states that

the Court shall determine the fair value of the shares exclusive of any element of value arising from the accomplishment or expectation of the merger or consolidation, together with interest, if any, to be paid upon the amount determined to be the fair value. In determining such fair value, the Court shall take into account all relevant factors.

…] The statute thus places the obligation to determine the fair value of the shares squarely on the court. […]

The standard of “fair value” is “a jurisprudential concept that draws more from judicial writings than from the appraisal statue itself.” Del. Open MRI, 898 A.2d at 310. “The concept of fair value under Delaware law is not equivalent to the economic concept of fair market value. Rather, the concept of fair value for purposes of Delaware’s appraisal statute is a largely judge-made creation, freighted with policy considerations.” Finkelstein v. Liberty Digital, Inc., 2005 WL 1074364, at *12 (Del. Ch. Apr. 25, 2005). In Tri-Continental Corp. v. Battye, 74 A.2d 71 (Del. 1950), the Delaware Supreme Court explained in detail the concept of value that the appraisal statute employs:

The basic concept of value under the appraisal statute is that the stockholder is entitled to be paid for that which has been taken from him, viz., his proportionate interest in a going concern. By value of the stockholder’s proportionate interest in the corporate enterprise is meant the true or intrinsic value of his stock which has been taken by the merger. In determining what figure represents the true or intrinsic value, . . . the courts must take into consideration all factors and elements which reasonably might enter into the fixing of value. Thus, market value, asset value, dividends, earning prospects, the nature of the enterprise and any other facts which were known or which could be ascertained as of the date of the merger and which throw any light on future prospects of the merged corporation are not only pertinent to an inquiry as to the value of the dissenting stockholder’s interest, but must be considered …


“The time for determining the value of a dissenter’s shares is the point just before the merger transaction ‘on the date of the merger’.” Appraisal Rights, supra, at A-33 (quoting Technicolor I, 542 A.2d at 1187). Put differently, the valuation date is the date on which the merger closes. Consequently, if the value of the corporation changes between the signing of the merger and the closing, the fair value determination must be measured by the “operative reality” of the corporation at the effective time of the merger. […]

The statutory obligation to make a single determination of a corporation’s value introduces an impression of false precision into appraisal jurisprudence. “The value of a corporation is not a point on a line, but a range of reasonable values, and the judge’s task is to assign one particular value within this range as the most reasonable value in light of all the relevant evidence and based on considerations of fairness.” Cede & Co. v. Technicolor, Inc., 2003 WL 23700218, at *2 (Del. Ch. July 9, 2004), affd in part, rev’d on other grounds, 884 A.2d 26 (Del. 2005).

  1. The Final Merger ConsiderationAsThe Best Evidence Of Fair Value

The Company contends that the Final Merger Consideration [NdC – si tratta del corrispettivo riconosciuto agli azionisti di Dell Inc. in sede di cash-out merger, pari a 13,75 dollari per azione] is the best evidence of the Company’s fair value on the closing date. As the proponent of this valuation methodology, the Company bears the burden of establishing its reliability and persuasiveness. In this case, the Final Merger Consideration is certainly a relevant factor, but it is not the best evidence of the Company’s fair value.

  1. Deal PriceAsA Subset Of Market Value

The consideration that the buyer agrees to provide in the deal and that the seller agrees to accept is one form of market price data, which Delaware courts have long considered in appraisal proceedings. […]

Recent jurisprudence has emphasized Delaware courts’willingness to consider market price data generated not only by the market for individual shares but also by the market for the company as a whole. If the merger giving rise to appraisal rights “resulted from an arm’s-length process between two independent parties, and if no structural impediments existed that might materially distort the ‘crucible of objective market reality,’” then “a reviewing court should give substantial evidentiary weight to the merger price as an indicator of fair value”. [1]

Here too, however, the Delaware Supreme Court has eschewed market fundamentalism by making clear that market price data is neither conclusively determinative of nor presumptively equivalent to fair value:

Section 262(h) neither dictates nor even contemplates that the Court of Chancery should consider the transactional market price of the underlying company. Rather, in determining “fair value”, the statute instructs that the court “shall take into account all relevant factors”. Importantly, this Court has defined “fair value” as the value to a stockholder of the firm as a going concern, as opposed to the firm’s value in the context of an acquisition or other transaction. Determining “fair value” through “all relevant factors” may be an imperfect process, but the General Assembly has determined it to be an appropriately fair process. ...

Section 262(h) unambiguously calls upon the Court of Chancery to perform an independent evaluation of “fair value” at the time of a transaction. It vests the Chancellor and Vice Chancellors with significant discretion to consider “all relevant favors” and determine the going concern value of the underlying company. Requiring the Court of Chancery to defer “conclusively or presumptively” to the merger price, even in the face of a pristine, unchallenged transactional process, would contravene the unambiguous language of the statute and the reasoned holdings of our precedent. It would inappropriately shift the responsibility to determine “fair value” from the court to the private parties. Also, while it is difficult for the Chancellor and Vice Chancellors to assess wildly divergent expert opinions regarding value, inflexible rules governing appraisal provide little additional benefit in determining “fair value” because of the already high costs of appraisal actions. . . . Therefore, we reject . . . [the] call to establish a rule requiring the Court of Chancery to defer to the merger price in any appraisal proceeding.

Golden Telecom, Inc. v. Glob. GT LP (Golden Telecom II), 11 A.3d 214, 217-18 (Del. 2010) (footnotes omitted).

Since Golden Telecom II, and consistent with the Delaware Supreme Court’s teaching in that decision, the Court of Chancery has considered the deal price as one of the “relevant factors” when determining fair value. [2] In at least five decisions, the Court of Chancery has found the deal price to be the most reliable indicator of the company’s fair value, particularly when other evidence of fair value was weak. [3]

Depending on the facts of the case, a variety of factors may undermine the potential persuasiveness of the deal price as evidence of fair value. For one, in a public company merger, the need for a stockholder vote, regulatory approvals, and other time-intensive steps may generate a substantial delay between the signing date and the closing date. The deal price provides a data point for the market price of the company as of the date of signing, but as discussed above, the valuation date for an appraisal is the date of closing. See Part II, supra. Market pricing indications can change rapidly, whether in the stock market or the deal market. […]

Another issue is the reality that the M&A market for an entire company has different and less confidence-promoting attributes than the public trading markets. […]

There is also the recognized problem that an arms’length deal price often includes synergies. This can be true even for a financial buyer, because “the aggregation of shares, which eliminates agency costs in the process, is a value-creating transaction.” Lawrence A. Hamermesh & Michael L. Wachter, Rationalizing Appraisal Standards in Compulsory Buyouts, 50 B.C. L. Rev. 1021, 1050 (2009). The value of synergies “would not otherwise exist in the enterprise itself” and therefore represent “an element of value arising from the accomplishment or expectation of the merger or consolidation’ that must be excluded”. Id. at 1029 (quoting 8 Del. C. § 262). Consequently, “the appraisal statute requires that the Court exclude any synergies present in the deal price – that is, value arising solely from the deal.” BMC, 2015 WL 6164771, at *14.

These three factors suggest that even with a public company target, deal price will not inevitably equate to fair value. It could be higher or lower. Doubtless other factors, some of which favor the deal price and others which cut against it, will emerge from academic research and through case-by-case development. The respondent corporation still may be able to establish that the merger price is the best evidence of fair value – and it often will be – but the corporation must carry its burden on that point. See Golden Telecom II, 11 A.2d at 217-18.

  1. The Appraisal Inquiry ContrastedWithThe Breach Of Fiduciary Duty Inquiry

An equally important consideration when evaluating the persuasiveness of the deal price for establishing fair value is the nature of the court’s review of the process that led to the transaction. Here, the distinction between a breach of fiduciary duty case and an appraisal proceeding looms large:

[W]hile the transaction particulars undergirding appraisal are related to and can sometimes overlap with those relevant to the fiduciary duty class action, the emphasis is crucially different. In a fiduciary duty class action, the court is faced with the question of holding individual directors personally liable for having breached their duties to the stockholders. Courts are naturally and properly hesitant to take such a drastic step lest directors become risk-averse, making decisions with an eye toward minimizing the risk of personal liability rather than seeking to maximize expected value for stockholders. An appraisal action asks a substantially more modest question: did the stockholders get fair value for their shares in the merger? If not, the acquirer must make up the difference, but no one is held personally liable.

[Charles Korsmo & Minor Myers, Reforming Modern Appraisal Litigation, 41 Del. J. Corp. L. (forthcoming 2016)], at 48 (footnote omitted). The two inquiries are different, so a sale process might pass muster for purposes of a breach of fiduciary claim and yet still generate a sub-optimal process for purposes of an appraisal.

The central question in a breach of fiduciary duty case is whether the defendant fiduciaries acted in a manner that should subject them personally to a damages award. To determine whether a breach of duty occurred, a court applying Delaware law evaluates the directors’conduct through the lens of a standard of review. “Delaware has three tiers of review for evaluating director decision-making: the business judgment rule, enhanced scrutiny, and entire fairness.” Reis v. Hazelett StripCasting Corp., 28 A.3d 442, 457 (Del. Ch. 2011). “Enhanced scrutiny is Delaware’s intermediate standard of review.” In re Trados Inc. S’holder Litig. (Trados II), 73 A.3d 17, 43 (Del. Ch. 2013).

Framed for purposes of an M&A transaction, […] the enhanced scrutiny standard of review examines (i) the reasonableness of “the decisionmaking process employed by the directors, including the information on which the directors based their decision,” and (ii) “the reasonableness of the directors’action in light of the circumstances then existing.” [Paramount Com­mc’ns Inc. v. QVC Network Inc., 637 A.2d 34, 44 (Del. 1994)]. “Through this examination, the court seeks to assure itself that the board acted reasonably, in the sense of taking a logical and reasoned approach for the purpose of advancing a proper objective, and to thereby smoke out mere pretextual justifications for improperly motivated decisions.” [In re Dollar Thrifty S’holder Litig., 14 A.3d 573, 611-12 (Del. Ch. 2010)], at 598. […]

[…] What typically generates a finding of breach “is evidence of self-interest, undue favoritism or disdain towards a particular bidder, or a similar non-stockholder-motivated influence that calls into question the integrity of the process.” [In re Del Monte Foods Co. S’holders Litig., 25 A.3d 813, 830 (Del. Ch. 2011)], at 831. The test is not whether the outcome was in fact the best transaction reasonably available, and the failure to achieve what actually would have been the best transactional outcome, standing alone, is not a basis for liability. The outcome that the directors achieved will figure into the damages calculation, but only if the matter reaches that phase. The outcome is not part of the liability case.

In an appraisal proceeding, by contrast, the opposite is true. The court does not judge the directors’motives or the reasonableness of their actions, but rather the outcome they achieved. The price is all that matters because the court’s inquiry focuses exclusively on the value of the company. How and why the directors achieved fair value or fell short is not part of the case. The sale process is useful to the extent–and only to the extent–that it provides evidence of the company’s value on the date the merger closed.

Because the standards differ, it is entirely possible that the decisions made during a sale process could fall within Revlon’s range of reasonableness, and yet the process still could generate a price that was not persuasive evidence of fair value in an appraisal. […] Put differently, even if a transaction passes fiduciary muster, an appraisal proceeding could result in a higher fair value award. […]

  1. MBO StatusAsAn Additional Factor

A third factor when considering the persuasiveness of the deal price is the fact that the Merger was a [management buyout (“MBO”]. Because of management’s additional and conflicting role as buyer, MBOs present different concerns than true arms’length transactions. […] Although the literature is far from unanimous in its analysis and policy recommendations […], the weight of authority suggests that a claim that the bargained-for price in an MBO represents fair value should be evaluated with greater thoroughness and care than, at the other end of the spectrum, a transaction with a strategic buyer in which management will not be retained.

  1. The Sale ProcessInThis Case

In this case, the Company’s process easily would sail through if reviewed under enhanced scrutiny. The Committee [NdC – si tratta del comitato compost da amministratori indipendenti nominato in seno al consiglio di amministrazione di Dell Inc. e incaricato di istruttoria e negoziazione sulla fusione: v. infra, par. 1 del commento che segue] and its advisors did manypraiseworthy things, and it would burden an already long opinion to catalog them. In a liability proceeding, this court could not hold that the directors breached their fiduciary duties or that there could be any basis for liability. But that is not the same as proving that the deal price provides the best evidence of the Company’s fair value. In this case, a combination of factors undercut the relationship between the Final Merger Consideration and fair value, undermining the persuasiveness of the former as evidence of the latter.

  1. The Pre-Signing Phase

The sale process in this case had two phases: (i) a pre-signing phase and (ii) a post-signing go-shop period. The Original Merger Consideration was the product of the pre-signing phase, and the evidence established that it was below fair value. Three factors contributed to this outcome: (i) the use of an LBO pricing model to determine the Original Merger Consideration, which had the effect in this case of undervaluing the Company, (ii) the compelling evidence of a significant valuation gap driven by the market’s short-term focus, and (iii) the lack of meaningful pre-signing competition.

  1. i. The LBO Pricing Model

The first factor that undermined the persuasiveness of the [merger consideration] was the use of an [leverage buyout (“LBO”)] pricing model. Delaware case law recognizes that the highest price a bidder is willing to pay is not the same as fair value. See, e.g., Appraisal of Orchard, 2012 WL 2923305, at *5. Although the Delaware Supreme Court has recognized that “[a] merger price resulting from arms-length negotiations . . . is a very strong indication of fair value,” it has also cautioned that the merger price “must be accompanied by evidence tending to show that it represents the going concern value of the company rather than just the value of the company to one specific buyer.” M.P.M. Enters., Inc. v. Gilbert, 731 A.2d 790, 797 (Del. 1999). The fact that a board has extracted the most that a particular buyer (or type of buyer) will pay does not mean that the result constitutes fair value.

In this case, the Committee only engaged during the pre-signing phase with financial sponsors. When proposing an MBO, a financial sponsor determines whether and how much to bid by using an LBO model, which solves for the range of prices that a financial sponsor can pay while still achieving particular IRRs. [4] What the sponsor is willing to pay diverges from fair value because of (i) the financial sponsor’s need to achieve IRRs of 20% or more to satisfy its own investors and (ii) limits on the amount of leverage that the company can support and the sponsor can use to finance the deal. […] Although a DCF methodology and an LBO model use similar inputs, they solve for different variables: “[T]he DCF analysis solves for the present value of the firm, while the LBO model solves for the internal rate of return.” Donald M. DePamphilis, Mergers, Acquisitions, and Other Restructuring Activities 506 (7th ed. 2014). […]

The factual record in this case demonstrates that the price negotiations during the pre-signing phase were driven by the financial sponsors’ willingness to pay based on their LBO pricing models, rather than the fair value of the Company. JPMorgan, Goldman, and Evercore [NdC – si tratta dei consulenti finanziari del comitato di amministratori indipendenti di Dell Inc.]advised the Committee that the financial sponsors would determine how much to pay by solving for their required IRRs using an LBO pricing model. In an October 2012 presentation to the Committee, JPMorgan advised the Committee that

  • “Financial buyers evaluate investments with an internal rate of return (IRR) analysis, which measures return on equity”;
  • “Multiple of cash invested (e.g. 2.0x) is also a key parameter, particularly for larger transactions”;
  • “IRR will be used as the primary means to determine the appropriate purchase price by a sponsor. . . .” […]

Using the same set of projections for both a [discounted cash flow (“DCF”)] analysis and an LBO analysis, JPMorgan showed why a financial sponsor would not be willing to pay an amount approaching the Company’s going-concern value. Using the September Case and a DCF analysis, JPMorgan valued the Company as a going concern at between $20 and $27 per share. But using the same projected cash flows in an LBO model, JPMorgan projected that a financial buyer’s willingness to pay would max out at approximately $14.13 per share, because at higher prices, the sponsor could not achieve a minimum return hurdle of a 20% IRR over five years. That $14.13 figure also assumed the sponsor engaged in further recapitalizations of the Company. Assuming a financial sponsor wanted to achieve IRRs in the range of 20% to 25%, JPMorgan placed the likely range of prices at $11.75 to $13.00, or $13.25 to $14.25 if the sponsor engaged in further recapitalizations of the Company.

Even if a financial sponsor was willing to accept a lower IRR such that it “could have” paid more for the Company, JPMorgan concluded that an MBO “would not have been possible for the company” at prices of $19 or more because it would require a level of leverage “that you could not get in the marketplace.” […] The issue was not whether the financial sponsors credited management’s projections. As JPMorgan’s analysis showed, the very same projections generated lower prices when run through an LBO model than when analyzed using a DCF analysis. […]

  1. The Valuation Gap

A second factor that undermined the persuasiveness of the [merger consideration] as evidence of fair value was the widespread and compelling evidence of a valuation gap between the market’s perception and the Company’s operative reality. The gap was driven by (i) analysts’focus on short-term, quarter-by-quarter results and (ii) the Company’s nearly $14 billion investment in its transformation, which had not yet begun to generate the anticipated results. A transaction which eliminates stockholders may take advantage of a trough in a company’s performance or excessive investor pessimism about the Company’s prospects (a so-called anti-bub­ble). Indeed, the optimal time to take a company private is after it has made significant long-term investments, but before those investments have started to pay off and market participants have begun to incorporate those benefits into the price of the Company’s stock. […]

The record at trial demonstrated that a significant valuation gap, investor myopia, and anchoring were all present in this case. Mr. [Michael] Dell [NdC – si tratta del fondatore, azionista e CEO di Dell Inc., promotore della fusione da cui si è originato il giudizio di appraisal: cfr. Par. 1 del commento che segue.] identified the opportunity to take the Company private after the stock market failed to reflect the Company’s going concern value over a prolonged period. He managed the Company for the long-term and understood that his strategic decisions would drive the stock price down in the short-term. […]

Taken as a whole, the foregoing evidence, along with other evidence in the record, establishes the existence of a significant valuation gap between the market price of the Company’s common stock and the intrinsic value of the Company. The anti-bubble both facilitated the MBO and undermined the reliability of the market price as a measure of the Company’s value. In reaching this finding, I recognize that “[t]here is virtually no CEO in America who does not believe that the market is not valuing her company properly.” Chesapeake Corp. v. Shore, 771 A.2d 293, 327 (Del. Ch. 2000) (Strine, V.C.). In this case, however, the evidence of a significant valuation gap was both extensive and compelling.

iii. Limited Pre-Signing Competition

A third factor that undermined the persuasiveness of the Original Merger Consideration as evidence of fair value was the lack of meaningful price competition during the pre-signing phase. Go-shops in MBO transactions rarely produce topping bids, so the bulk of any price competition occurs before the deal is signed. The competition does not have to be direct and overt; and the prospect of post-signing competition can help raise the prices offered during the pre-signing phase. But the shadow of competition is more spectral and less efficacious than its reality: “Whether it should be so or not, human beings often value things—even other human beings like romantic partners—more when others might claim them.” [5] […] There is also the “reality that there is not a culture of rampant topping among the larger private equity players, who have relationships with each other that might inhibit such behavior.” [6] The price established during the pre-signing phase is therefore critical, and it is the presence or realistic threat of competition during this period that drives up the price.

In this case, the record established that there was minimal competition during the pre-signing phase. The Committee initially engaged with only two financial sponsors, and KKR [NdC – si tratta di un fondo di private equity che aveva presentato una offerta concorrente non vincolante per l’acquisto delle azioni di Dell Inc.] dropped out after providing its initial expression of interest. At that point, the Committee brought in [Texas Pacific Group (“TPG”)] [NdC – si tratta di un altro fondo che aveva manifestato interesse per Dell Inc.], but that firm dropped out as well. It is certainly true, as the Company argues, that the decisions that KKR and TPG made can be viewed as indicating that the Company was risky and difficult to value, but it also left the Committee negotiating with a single bidder. The Committee did not engage with Blackstone before signing, even though Blackstone approached the Company in January about a possible transaction.

During the pre-signing phase, the Committee did not contact any strategic buyers. HP was the obvious choice, and Evercore would later estimate that a deal between the Company and HP could generate between $3 and 4 billion in annual cost savings. Evercore doubted whether any other strategic bidders could acquire the Company given its size, and JPMorgan doubted that any strategic bidders would be interested. A direct, pre-signing outreach to HP therefore might well have been warranted. The Committee chose not to contact HP. The lack of any outreach to strategic bidders and the assessment that strategic interest was unlikely meant that the financial sponsors did not have to push their prices upward to pre-empt potential interest from that direction.

Without a meaningful source of competition, the Committee lacked the most powerful tool that a seller can use to extract a portion of the bidder’s anticipated surplus. The Committee had the ability to say no, and it could demand a higher price, but it could not invoke the threat of an alternative deal. When the Committee made its final demand, Silver Lake stood firm. It was Mr. Dell who bridged the gap by accepting a lower valuation for his rollover shares. Although he sacrificed some value by doing so, Evercore’s analysis indicates that it was a good decision, and that he stands to enjoy greater returns than Silver Lake.

Taken as a whole, the foregoing evidence, along with other evidence in the record, establishes that there was a lack of meaningful price competition during the pre-signing phase. This factor undermined the reliability of the [merger consideration] as a measure of the Company’s value […].

  1. The Post-Signing Phase

Although the evidence proved that the Original Merger Consideration [NdC – si tratta del corrispettivo riconosciuto agli azionisti di Dell Inc. nell’ambito dell’accordo di fusione, pari a 13,65 dollari per azione] was not the best evidence of fair value, the sale process did not stop there. The process entered a second phase, during which Evercore conducted a go-shop. Two higher bids emerged, one from Blackstone and another from Icahn. Blackstone eventually withdrew its bid, but Icahn continued to compete. When it appeared that stockholders would vote down the original deal, the Committee and the Buyout Group [NdC – si tratta della cordata di investitori guidata da Michael Dell e da Silver Lake] amended the Merger Agreement [NdC – si tratta dell’accordo di fusione concluso tra il “Buyout Group” e Dell Inc. all’esito della trattativa]. The amendment provided for the Final Merger Consideration, representing an increase of 23 cents, or 2%, over the Original Merger Consideration.

Based on this evidence, the Company makes a straightforward argument: Capitalists want to make money, and America is full of capitalists, so it is counterintuitive and illogical – to the point of being incredible – to think that another party would not have topped Mr. Dell and Silver Lake if the Company was actually worth more. In my view, this argument has force for large valuation gaps, and is sufficiently persuasive to negate the valuation of $28.61 per share that the petitioners advanced. If the Company was really worth more than double what the Buyout Group was paying, then a strategic bidder like HP would have recognized a compelling opportunity and intervened.

But the go-shop process was not sufficiently persuasive to rule out smaller valuation gaps. Financial sponsors – the only parties who showed interest in this case – faced the same leverage constraints and IRR hurdles as the Buyout Group, and the record demonstrated that a buyer using a leverage-based model would not bid high enough to generate fair value. The fact that two competing financial sponsors proposed higher-valued, debt-fueled alternatives indicates that the Original Merger Consideration was low, even when evaluated from the standpoint of the returns that a leverage-based model could generate. The topping bids also exceeded the Final Merger Consideration. They not only help confirm that the Original Merger Consideration did not provide fair value, but they also undercut the notion that the Final Merger Consideration provided fair value.

Although the go-shop phase in this case did increase the amount of consideration that the Company’s stockholders received, that fact did not establish that the stockholders received fair value either. In this case, it demonstrated only that the stockholders received an amount closer to the highest price that a bidder whose valuation was derived from and dependent on an LBO model was willing to pay.

  1. i. The Results of the Go-Shop

The actual results of the go-shop process provide a starting place for analysis. To the good, it did generate two higher indications of interest for the whole Company. Blackstone, one of the world’s largest and most sophisticated financial institutions, proposed to acquire the Company in a transaction that would give the Company’s existing stockholders a choice between a cash payment of at least $14.25 per share or shares in a new entity valued at $14.25 per share, subject to a cap on the total amount of equity that the new entity would issue. Icahn, also a financially strong and highly sophisticated M&A player, proposed a similar transaction in which stockholders would receive a combination of cash and stock, subject to a cap on the amount of cash. Evercore valued Icahn’s proposal at between $13.37 and $14.42 per share. Both transactions contemplated continuing the Company’s operating business and generating returns predominantly through financial engineering. Blackstone may have contemplated selling the Company’s financing arm to help pay down the acquisition debt.

As previously discussed, MBO go-shops rarely generate topping bids. Given that fact, for two higher bids to have emerged suggests that the Original Merger Consideration was relatively low. That conclusion is consistent with the evidence and the analysis of the pre-signing process conducted above. The fact that two higher bids emerged from financial sponsors suggests that the Original Merger Consideration was sufficiently low to enable other firms to be competitive when using similar leveraged-pricing models. Both Blackstone and Icahn were financial sponsors, and both were proposing leveraged transactions. Each planned to lever up a still-public company, return the resulting cash to the public stockholders, and keep a public stub outstanding, but the underlying financial engineering paralleled what the Buyout Group was proposing. Both topping bidders were therefore constrained by the LBO model, both in terms of limits on the availability of leverage and the pricing necessary to generate the required IRRs over the anticipated investment period. The fact that they emerged indicates that the Original Merger Consideration was low not only when judged against a fair value metric, but also when judged by an LBO model.

In this case, therefore, one evidentiary implication of the results of the go-shop is to reinforce the conclusion that the Original Merger Consideration did not equate to fair value. It has similar evidentiary implications for the Final Merger Consideration. Although Blackstone later withdrew its bid, Icahn continued to advance its proposal. When it appeared that stockholders would vote down the Merger if all the Buyout Group offered was the Original Merger Consideration, the Buyout Group increased its price. The question then becomes whether the increase was sufficient to establish the Final Merger Consideration as fair value. This decision finds that the answer is “no”.

As during the pre-signing process, competition from a financial sponsor might have induced the Buyout Group to increase its bid within the confines of the LBO model, but it did not lead to competition at a level indicative of fair value. When it appeared that stockholders would vote down the deal, the Buyout Group increased its offer by 23 cents, or approximately 2% of the Original Merger Consideration. The 2% bump is consistent with an increase within the confines of the LBO model. Notably, both Blackstone’s proposal and the upper range of Icahn’s proposal exceeded the Final Merger Consideration as well. The fact that the holders of just over half of the unaffiliated shares outstanding took the price does not mean it is equivalent to fair value. […]

The 2% increase that the Buyout Group offered to secure a favorable vote was all that the go-shop process achieved. Given the evidence that the pre-signing phase did not generate a price that was equivalent to fair value, and in light of the nature of the competition that took place during the go-shop phase, the 2% bump was not sufficient to prove that the Final Merger Consideration was the best evidence of fair value.


  1. The Probative ValueOfThe Sale Process

Taken as a whole, the Company did not establish that the outcome of the sale process offers the most reliable evidence of the Company’s value as a going concern. The market data is sufficient to exclude the possibility, advocated by the petitioners’expert, that the Merger undervalued the Company by $23 billion. Had a value disparity of that magnitude existed, then HP or another technology firm would have emerged to acquire the Company on the cheap. What the market data does not exclude is an underpricing of a smaller magnitude, given that all of the participants constructed their bids based on a leveraged financing model and were limited by its constraints.

  1. The DCF AnalysisAsEvidence Of Fair Value

[…] [NdC – in tale sezione si dà conto del processo seguito dal giudice per la valutazione delle azioni di Dell Inc. in base al metodo dell’at­tua­lizzazione dei flussi di cassa futuri]

  1. The ResultOfThe DCF Valuation


[…] [T]he two DCF valuations generates a fair value of $17.62 per share.

  1. The Relationship BetweenTheDCF Valuation And The Merger Price

The fair value generated by the DCF methodology comports with the evidence regarding the outcome of the sale process. The sale process functioned imperfectly as a price discovery tool, both during the pre-signing and post-signing phases. Its structure and result are sufficiently credible to exclude an outlier valuation for the Company like the one the petitioners advanced, but sufficient pricing anomalies and dis-incentives to bid existed to create the possibility that the sale process permitted an undervaluation of several dollars per share. Financial sponsors using an LBO model could not have bid close to $18 per share because of their IRR requirements and the Company’s inability to support the necessary levels of leverage. Assuming the $17.62 figure is right, then a strategic acquirer that perceived the Company’s value could have gotten the Company for what was approximately a 25% discount. Given the massive integration risk inherent in such a deal, it is not entirely surprising that HP did not engage and that no one else came forward. Had the valuation gap approached what the petitioners’expert believed, then the incentives to intervene would have been vastly greater.

Because it is impossible to quantify the exact degree of the sale process mispricing, this decision does not give weight to the Final Merger Consideration. It uses the DCF methodology exclusively to derive a fair value of the Company. […]».

Articoli Correlati: giurisprudenza straniera - hedge funds


1. I fatti alla base della decisione in commento. - 2. Caratteristiche essenziali del rimedio di appraisal. - 3. Il c.d. appraisal litigation. - 4. I criteri di determinazione del valore delle azioni in sede di appraisal e la questione del c.d. deal price. La posizione della giurisprudenza fino a Dell. - 5. (Segue). La posizione della Court of Chancery in Dell. - 6. (Segue). Dell al crocevia tra scelta dei criteri valutativi, protezione delle minoranze e attivismo degli hedge funds: un punto d’approdo equilibrato? - NOTE

1. I fatti alla base della decisione in commento.

La sentenza della Court of Chancery del Delaware qui annotata occupa un ruolo importante della discussione che da alcuni anni, negli Stati Uniti, investe il c.d. diritto di appraisal, cioè il diritto di disinvestimento riconosciuto all’azionista che non abbia concorso all’approva­zione di una fusione, il quale può chiedere la liquidazione e il pagamento in denaro, a spese della società, del “valore equo” delle azioni possedute. Nonostante l’appraisal sia di introduzione legislativa risalente nel tempo, solo nell’ultimo decennio si è registrato un ricorso massiccio a tale rimedio, dovuto in larga parte all’iniziativa degli hedge funds, che hanno inaugurato un vero e proprio “filone” di conteziosi, capace di interferire in modo significativo sul mercato delle operazioni di acquisizione e fusione negli Stati Uniti. Di qui, la notevole attenzione che operatori di mercato, giuristi, studiosi di finanza, e – in Delaware – lo stesso legislatore riservano oggi a questa materia, con particolare riferimento al tema della determinazione del valore delle azioni da riconoscere a chi lo esercita [7]. Prima di descrivere il contesto nel quale la decisione in commento si inserisce e soffermarsi sulle ragioni per cui la stessa risulta particolarmente meritevole di attenzione, può essere utile riassumere brevemente i termini dell’operazione [continua ..]

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2. Caratteristiche essenziali del rimedio di appraisal.

Le caratteristiche dell’appraisal variano in modo significativo nei singoli ordinamenti societari della federazione americana [12]. In Delaware, l’appraisal di cui al § 262 DGCL è attivabile solo in caso di fusione, da parte degli azionisti di qualsiasi società partecipante che non abbiano espresso voto favorevole all’operazione [13]. Il rimedio non è disponibile rispetto ad altre operazioni, che pure potrebbero avere un impatto dirompente sull’investimento dell’azionista (si pensi alla cessione dell’intera azienda sociale, ovvero a modifiche statutarie significative, o al trasferimento della sede sociale in altra giurisdizione) [14]. L’appraisal non è neppure invocabile in caso di fusione, quando le azioni della società di cui si chiede la liquidazione siano quotate (o la società sia comunque una public company) e sia quindi disponibile, in linea di principio, un mercato per il disinvestimento che non richiede l’attivazione di un rimedio societario ad hoc (c.d. market-out rule: § 262(b) DGCL). Tale regola soffre a sua volta un’eccezione nel caso in cui gli azionisti della società con azioni quotate ricevano in scambio azioni non quotate o denaro (come avviene in un cash-out merger): § 262(b)(2) [15]. Va segnalato che è onere dell’azionista che [continua ..]

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3. Il c.d. appraisal litigation.

Storicamente, il ricorso all’appraisal è stato piuttosto limitato [17]. Soltanto a partire dai primi anni Duemila si è riscontrato un sostanziale incremento delle azioni in quest’ambito, sia per numero, sia per valore. Un vero e proprio “boom” si è verificato a partire dal 2007: se in quell’anno il valore complessivo dei ricorsi era ancora di pochi milioni di dollari, nel 2015-2016 l’ammon­tare dei valori di cui si è chiesta la liquidazione è stato nell’intorno dei 2 miliardi di dollari annui; inoltre, il numero delle fusioni cui fanno seguito richieste di appraisal è oggi compreso, in media, tra il 20 e il 25 per cento del totale delle operazioni annunciate [18]. La tendenza descritta è in larga parte conseguenza dell’intervento dei fondi hedge, i quali hanno individuato nell’appraisal significative opportunità di profitto, che vengono coltivate insieme al più tradizionale filone di “attivismo societario” rappresentato dalle iniziative assembleari (“campagne” pro o contro proposte di deliberazione, sollecitazione di deleghe, ecc.), dal “dialogo” (accompagnato da varie forme di pressione) con il management degli emittenti quotati e dal contenzioso incentrato sul tema della violazione dei doveri fiduciari da parte degli amministratori [19]. I dati disponibili dimostrano [continua ..]

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4. I criteri di determinazione del valore delle azioni in sede di appraisal e la questione del c.d. deal price. La posizione della giurisprudenza fino a Dell.

Le corti del Delaware hanno più volte modificato il proprio orientamento sulla scelta dei criteri da applicare al fine di determinare il valore di liquidazione delle partecipazioni societarie nei giudizi di appraisal [25]. In una prima fase, il valore era determinato applicando il c.d. Delaware block method, consistente nel calcolo di una media (con criteri di ponderazione dipendenti dal caso di specie) tra valori ricavati dall’applicazione del metodo patrimoniale, reddituale, finanziario, nonché in base al prezzo di borsa delle azioni, ai valori registrati in operazioni “comparabili” e ad altri fattori ancora [26]. All’inizio degli anni Ottanta, a partire dal caso Weinberger, simile metodo di valutazione “misto” è stato abbandonato a favore del criterio basato sull’attualizzazione di flussi di cassa futuri (discounted cash flows) [27]. In anni più vicini, anziché affidarsi a un metodo di valutazione propriamente inteso, la Court of Chancery ha tenuto in considerazione il “prezzo” dell’operazione (deal price) a cui si riferisce la richiesta di appraisal. Ciò si è tipicamente verificato nelle operazioni di cash-out merger nelle quali – come ricordato – non si dà un concambio determinato dal rapporto tra i compendi patrimoniali delle società [continua ..]

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5. (Segue). La posizione della Court of Chancery in Dell.

La sentenza in commento è parsa a molti operatori una nuova messa in discussione del più recente approdo interpretativo raggiunto dalla giurisprudenza. In Dell, infatti, la Court of Chancery ha scelto di non utilizzare il deal price come base per la determinazione del “valore equo” di liquidazione in sede di l’appraisal e ha proceduto, invece, a una propria autonoma valutazione basata sul criterio del discounted cash flow, con alcuni correttivi. Nei fatti, il fair value liquidato dal giudice è stato pari a 17,62 dollari per azione, con un premio di oltre il 28% sul corrispettivo riconosciuto agli azionisti di Dell Inc. in sede di fusione (13,75 dollari). Prima di verificare se la decisione in Dell rappresenti effettivamente un mutamento dell’indirizzo da ultimo fatto proprio dalla Court of Chancery, è necessario ripercorrere brevemente e analizzare le ragioni poste dal giudice a fondamento della propria decisione. A sostegno dell’affermata necessità di non “confermare” in sede di appraisal il corrispettivo riconosciuto in sede di cash-out, ma di procedere a una nuova operazione di stima, il Vice Chancellor Laster presenta due principali ordini di argomenti: uno di carattere tecnico-valutativo, uno riferito al percorso negoziale e decisionale seguìto dagli [continua ..]

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6. (Segue). Dell al crocevia tra scelta dei criteri valutativi, protezione delle minoranze e attivismo degli hedge funds: un punto d’approdo equilibrato?

La ragione che ha indotto numerosi tra i primi commentatori a ravvisare nella decisione Dell un mutamento del precedente indirizzo giurisprudenziale è nel fatto che il giudice si sia discostato dal “corrispettivo” di fusione nonostante abbia ritenuto non censurabile il processo decisionale che ha condotto alla fusione. Precedentemente, infatti, l’approvazione di una fusione rispettosa delle prerogative societarie della minoranza aveva costituito condizione sufficiente per l’affermazione della piena equivalenza deal price = appraisal value; ciò – si noti – anche nel contesto di operazioni di LBO [38]. Altri hanno espresso un giudizio meno netto, osservando come, in realtà, siano state le specifiche circostanze del caso a impedire la conferma dell’equazione tra deal price e valore equo: in particolare, la circostanza che l’operazione costituiva un management buyout tra parti correlate. Saremmo allora in presenza non di un mutamento di indirizzo, ma di una sua precisazione [39]. Osservando il caso Dell da una prospettiva che prescinda dalle contingenze “operative” dei primi commenti, si possono svolgere alcune sintetiche osservazioni. In prima analisi, l’assunto fondamentale della sentenza potrebbe lasciare perplessi: come può considerarsi incongruo, e quindi inutilizzabile in sede [continua ..]

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