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:

Court discourages use of "dismayingly divergent" experts in decision against leading appraisal arbitrage fund


For the decision reported below in which the court ignores "dismayingly divergent" views of professional valuation experts and characterizes the petitioners as "actually, arbitrageurs who bought, not into an ongoing concern, but instead into this lawsuit," see


Source: Reuters, October 21, 2015 article


Wed Oct 21, 2015 7:11pm EDT

Delaware judge rules against hedge funds in BMC buyout


A Delaware judge on Wednesday rejected hedge fund Merion Capital's attempt to wring an extra $150 million from the 2013 sale of BMC Software Inc by going to court and arguing that a fair deal price should have been much higher.

The case stemmed from the sale of BMC to a consortium including Bain Capital and Golden Gate Capital for $46.25 per share, for a total of $6.9 billion.

Just before the deal closed in 2013, funds affiliated with Merion Capital bought 7.6 million shares of BMC stock to pursue what has come to be known as "appraisal arbitrage," an investing strategy that Merion helped pioneer.

After the deal closed, Merion Capital asked a Court of Chancery judge to find that the fair value of their stock was actually $67.08 and order BMC to pay it an added $20 per share above the deal price, or an extra $156 million.

However, Vice Chancellor Sam Glasscock said in a 51-page opinion published Wednesday that a transparent sale was the best determinant of fair value.

"I find it appropriate to look to the price generated by the market through a thorough and vigorous sales process as the best indication of fair value under the specific facts presented here," he wrote.

Glasscock said he settled on the deal price in part because of the wide differences in expert testimony about the fair value of BMC shares. The company argued for fair value at $37.88 per share.

Merion and its attorney at Ashby & Geddes in Wilmington, Delaware, did not immediately respond to a request for comment.

Critics say interest, which accrues at 5.75 percent on the investor's holding during the case, encourages appraisal arbitrage. The U.S. Chamber of Commerce has lobbied for legislation to cut the interest and limit appraisal to long-term investors.

Merion, founded by securities class action lawyer Andrew Barroway, has been a leader in bringing appraisal arbitrage cases. Earlier this year, Glasscock ruled against Merion in the buyout of, also finding the deal price was fair.

One legal expert who studies appraisal said the and BMC cases show investors need to understand when to seek appraisal.

"These cases suggest appraisal can still be a useful remedy for a stockholder, but you can't just have a briefcase full of analysis and hope to pull the wool over a judge's eyes," said Minor Myers, a professor at Brooklyn Law School.


The program supporting Appraisal Rights Investments was conducted by the Shareholder Forum for invited participants according to stated conditions, including standard Forum policies that each participant is expected to make independent use of information obtained through the Forum and that participant identities and views will not be reported without explicit permission..

The information provided to Forum participants is intended for their private reference, and permission has not been granted for the republishing of any copyrighted material. The material presented on this web site is the responsibility of Gary Lutin, as chairman of the Shareholder Forum.

Shareholder Forum™ is a trademark owned by The Shareholder Forum, Inc., for the programs conducted since 1999 to support investor access to decision-making information. It should be noted that we have no responsibility for the services that Broadridge Financial Solutions, Inc., introduced for review in the Forum's 2010 "E-Meetings" program and has since been offering with the “Shareholder Forum” name, and we have asked Broadridge to use a different name that does not suggest our support or endorsement.