The Shareholder Forumtm

support of long term investor interests in

Appraisal Rights


Intrinsic Value Realization




The Delaware Supreme Court issued a ruling on December 14, 2017 that endorsed its interpretation of the "Efficient Market Hypothesis" as a foundation for relying upon market pricing to define a company’s “fair value” in appraisal proceedings. The Forum accordingly reported that it would resume support of marketplace processes instead of judicial appraisal for its participants' realization of intrinsic value in opportunistically priced but carefully negotiated buyouts. See:

December 21, 2017 Forum Report

 Reconsidering Appraisal Rights for Long Term Value Realization




Forum distribution:

Reports of increasing fund manager interest in appraisal rights investments


Source: American Lawyer, March 5, 2014 article

Appraisal Rights the Latest Tool for Yield-Hungry Hedge Funds

Hilary Johnson , The American Lawyer

March 05, 2014


Along with being the most active of activist investors, hedge funds are also shaking up the business world with their newfound interest in the use of appraisal rights, writes Steven Davidoff, an Ohio State University law professor, former Shearman & Sterling corporate lawyer and regular contributor to The New York Times’ DealBook blog.

Davidoff explored the trend in his Wednesday “Deal Professor” column by zeroing in on last year’s management buyout of Dole Foods. In the months since the $13.50-per-share purchase price eked out shareholder approval with 50.9 percent of the vote, hedge funds Fortress Investment Group, Hudson Bay Capital Management, Magnetar Capital and Merion Capital Group have combined to buy up about 14 million Dole shares, Davidoff writes. Those funds, Davidoff notes, are now using their appraisal rights to try to get more money out of their investment—and are doing the same at such other companies as, Dell and BMC Software.

The funds have a simple reason for following this path: return on investment. With appraisal rights, Davidoff writes, there is interest paid of at least 5 percent on the money invested in the shares under dispute: “In this market, that is a good return if you expect to at least get the merger price,” he says.

Davidoff also says he expect the trend to accelerate, with interesting implications for companies, shareholders, institutional investors, and potential dealmakers who may now “hesitate before they act.”

Concludes Davidoff: “The battle being waged by hedge funds over appraisal rights in the Dole buyout just may be the tipping point, as hundreds of millions of dollars flow to the funds to pursue these actions."

Copyright 2014. ALM Media Properties, LLC.


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