Delaware Chancery Court Considers Panera Deal Price in Appraisal Suit: Court of Chancery Determines Deal Price Exceeds Fair Value, But Panera Is Not Entitled to a Refund Under the Appraisal Statute

Sullivan & Cromwell LLP - February 4, 2020
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The Delaware Court of Chancery ruled in In re Appraisal of Panera Bread Company, following a six-day trial, in a 130-page decision issued on January 31, 2020, that the petitioners received more than fair value for each share of Panera Bread Company (“Panera”) in connection with its 2017 acquisition by JAB Holdings B.V., with the Court relying on the deal price, minus synergies value, as the metric of fair value for the case.  Because Panera had paid the appraisal petitioners the full merger price as permitted by Delaware law, it sought a refund of the amount of the deducted synergies.  Addressing an issue of first impression, the Court concluded that Panera did not have a basis for a refund under Delaware’s appraisal statute.  The Panera decision reaffirms well-established indicia used by Delaware courts to evaluate whether a sale process is reliable and probative of fair value, while providing useful guidance to merger parties when considering the important question of whether or in what amount to pay appraisal petitioners in order to reduce exposure to prejudgment interest.