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Fair Investor Access

See related case examples of

Dell Inc.

appraisal rights for intrinsic value realization

and

Walgreen Co.

stock buyback policies

"Fair Access" Home Page

"Fair Access" Program Reference

For graphs of specific company and related industry returns, see

Returns on Corporate Capital

For graphs of specific company voting for the past 5 years, see

Shareholder Support Rankings

 

 

 

 

 

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Forum Report: Fair Investor Access

Workshop: Appraisal Rights

 

Reconsidering Appraisal Rights for Long Term Value Realization

Last week’s ruling of the Delaware Supreme Court in the Dell appraisal case[1] requires our reconsideration of reliance upon rights to appraisal for realization of intrinsic value when a company is sold.

The ruling is broadly viewed as intended to end the confusion created by the development of specialized “appraisal arbitrage” funds, which had been inspired by the Dell proceeding. This new litigation investment strategy was loudly criticized as parasitic by both corporate and investment professionals concerned with negotiating buyouts, and it also discouraged the use of appraisal for its intended purpose of providing mainstream investors with a means of realizing long term intrinsic value in opportunistically priced (but fairly negotiated) mergers.

The court’s solution is to officially endorse its view of the “efficient market hypothesis”[2] as a foundation for relying upon market pricing to define a company’s “fair value.” While this theory might be questioned by many investors and economists, its mandated adoption for future court appraisals can be expected to stop the circus of cases that threatened Delaware’s credibility as a reliable legal home for corporations.

Unfortunately, the court’s official view that fair price is the same as fair value also puts an end to reliance upon Delaware appraisal proceedings as a means of assuring an investor’s realization of the long term value of capital contributions to an enterprise. But this was not, after all, something we had expected to be able to rely upon until recently, when the Dell situation stimulated our development of processes to support participation by regulated funds and individual investors. And, as long-time Forum participants will recall, we have established other marketplace solutions that remain viable to address these essential shareholder interests.[3]

GL – December 21, 2017

Gary Lutin

Chairman, The Shareholder Forum

575 Madison Avenue, New York, New York 10022

Tel: 212-605-0335

Email: gl@shareholderforum.com

 


 

 

 

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