Appraisal only if no fraud or illegality Glassman – Full disclosure required otherwise SH appraisal Berger v. Pubco Corp. – class action available recover difference between fair value and merger – price with no down side and no need to opt in Cases (Fair Dealing includes duty of candor) Weinberger v. UOP CSH owns 50.5% - CSH, Controls 6/13 directors and president de jure FD Class Action Solves collective action problem Can file before merger is complete can get fair price, rescission, value of – alternative bid (if available), etc. risk Get damages or can still take merger value on loss – CSH-SD-X is always under fairness, BUT use of committee acting at arm’s length, or vote of fully informed majority of minority will shift burden Fair Dealing How transaction is initiated, structured, negotiated, – disclosed to board, and how director/SH approval is obtained Includes Duty of Candor Mainly turns on using UOP directors to generate report with UOP resources about firm valuation that isn’t disclosed to independent directors or SHs Outside bank report doesn’t cure because it was sloppy Fair Price Economic factors assets, market value, earnings, future – – prospects, any other elements that affect intrinsic/inherent value of stock DE method “block” Fair value of firm as going-concern (as an operating business) Per-share value of whole firm, not just minority interest Includes non-speculative synergies from the merger When there is no fraud, price is the focus Rabkin v. Philip A. Hunt Chemical Corporation Olin buys 63.4% of PHC for $25/share, waits 1y and tenders at $20 to get around agreement Breach is fraud/misrepresentation/SD SH action challenging merger where owed FD to SHs and SD Cede – Δ Not exclusive even if sole complaint is and even if seeking appraisal damages (Andra) Holding: No dismissal (though X eventually fair) if CSH action was precisely contemplated in the K and but-for strategic behavior, CSH wouldn’t have done this Kahn v. Alcatel has 30.6 then 43.3% of amends cert for 80% SH vote 4 merger 5/11 board, 2/3 exec. Committee, 2/4 compensation (de control) – facto
Glassman – Appraisal only if no fraud or illegality Berger v. Pubco Corp. – Full disclosure required otherwise SH appraisal class action available – recover difference between fair value and merger price with no down side and no need to opt in Cases Weinberger v. UOP (Fair Dealing includes duty of candor) CSH owns 50.5% - de jure CSH, Controls 6/13 directors and president FD Class Action Solves collective action problem Can file before merger is complete – can get fair price, rescission, value of alternative bid (if available), etc. risk – Get damages or can still take merger value on loss CSH-SD-X is always under fairness, BUT use of committee acting at arm’s length, or vote of fully informed majority of minority will shift burden Fair Dealing – How transaction is initiated, structured, negotiated, disclosed to board, and how director/SH approval is obtained Includes Duty of Candor Mainly turns on using UOP directors to generate report with UOP resources about firm valuation that isn’t disclosed to independent directors or SHs Outside bank report doesn’t cure because it was sloppy Fair Price – Economic factors – assets, market value, earnings, future prospects, any other elements that affect intrinsic/inherent value of stock DE “block” method Fair value of firm as going-concern (as an operating business) Per-share value of whole firm, not just minority interest Includes non-speculative synergies from the merger When there is no fraud, price is the focus Rabkin v. Philip A. Hunt Chemical Corporation Olin buys 63.4% of PHC for $25/share, waits 1y and tenders at $20 to get around agreement Breach is fraud/misrepresentation/SD Cede – SH action challenging merger where Δ owed FD to SHs and SD Not exclusive even if sole complaint is and even if seeking appraisal damages (Andra) Holding: No dismissal (though X eventually fair) if CSH action was precisely contemplated in the K and but-for strategic behavior, CSH wouldn’t have done this Kahn v. Alcatel has 30.6 then 43.3% of amends cert for 80% SH vote 4 merger – 5/11 board, 2/3 exec. Committee, 2/4 compensation (de facto control)