Delaware Chancery Court Considers Appraisal in First Major Decision Since Dell: Court of Chancery Chooses Unaffected Market Price, 30% Below Deal Price, as Fair Value.

Sullivan & Cromwell LLP - February 23, 2018

The evolution of Delaware law on appraisal continued in Verition Partners Master Fund Ltd. v. Aruba Networks, Inc., the first major appraisal decision from the Delaware Chancery Court since the Delaware Supreme Court’s ruling in Dell. The Aruba opinion was authored by Vice Chancellor Laster, who also wrote the Chancery Court decision reversed in Dell, and the opinion analyzes Dell and the Supreme Court’s recent DFC opinion at length. The principles that the Vice Chancellor takes from those two decisions led him to conclude that the fair value of Aruba’s stock was best represented by the unaffected market price of Aruba’s shares prior to news reports regarding its sale, a price 30% lower than the deal price. How the opinion gets to that result is an extremely interesting read that raises many questions about the future of the appraisal remedy in Delaware, most prominent among them whether the remedy is necessary at all for public companies operating in an efficient market.