The way the Delaware Chancery Court weighs deal price in stock appraisal actions could be in for a shakeup as the state Supreme Court is poised to consider the DFC Global and Dell cases, and experts say the results will have a wide impact on such litigation no matter the ruling.
On June 7, the justices are scheduled to consider an appeal of the Chancery Court’s determination that private equity fund Lone Star Fund VIII underpaid by about $100 million when it bought out payday lender DFC Global Corp. for $1.3 billion in 2014, a decision that only gave limited weight to the market price of the deal because of what Chancellor Andre G. Bouchard ruled was an uncertain regulatory environment for the sector.
Marc Boiron told Law360 that appraisal litigation is not necessarily always about process issues, but sometimes simply related to valuation, and foreclosing the ability to have a share price examined after a deal, except under certain circumstances could be too much of a curtail to shareholder rights.
“The appraisal process is a fair proceeding to have,” he said. “How could you take that away from shareholders.”
“If the Supreme Court is going to make a statement, it’s going to be in the Dell opinion,” said Boiron. “There has been so much going on with cases, and so many facts that it’s ripe for the Supreme Court to take a stand.”