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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 reference:

Use of records demand as foundation for class action breach of duty claim in buyout


Source: Law360, September 22, 2016 article

Outerwall Investor Wants Records After $1.6B Apollo Deal

By Chelsea Naso

Law360, Wilmington (September 22, 2016, 1:18 PM EDT) -- An Outerwall Inc. investor on Thursday sued the operator of Redbox movie rental kiosks in Delaware state court for access to company records to investigate potential misconduct in connection with Outerwall’s $1.6 billion acquisition by Apollo Global Management LLC affiliates.

Dean Dal Ben said in a complaint that he was denied a bid to inspect company documents, such as those prepared by Outerwall’s board of directors in connection with the Apollo deal. Under Delaware law, Dal Ben has the right to inspect the requested materials to investigate allegations that Outerwall’s board breached its fiduciary duty in connection with post-merger employment deals and that valuations by Morgan Stanley and others were not properly disclosed, he said.

“Plaintiff is permitted to apply to this court for an order compelling inspection of Outerwall’s corporate books and records because Outerwall has wrongfully refused to permit inspection,” Dal Ben said in the complaint.

The deal, which was first announced in July, will see the Apollo funds acquire all outstanding shares of Outerwall common stock for $52 apiece. The per-share price represents a 51 percent premium over the company’s closing stock price on March 14, which was the last day before Outerwall’s board announced it was exploring options for the company.

According to Dal Ben, members of Outerwall’s management, including CEO Erik Prusch, secured jobs in the post-merger company, prompting the need for a closer look.

“This benefit of maintaining employment interests in the post-merger, private company contaminated the process with virtually no oversight or direction from the company’s board — other than to sell,” Dal Ben said.

Additionally, Dal Ben said valuations of the company performed by Morgan Stanley, such as a comparable companies analysis, may not have been properly disclosed to investors.

A representative for Outerwall declined to comment on Thursday.

In addition to Redbox, Outerwall operates Coinstar machines. The company also runs an ecoATM business that allows customers to use kiosks to sell old tech devices such as cellphones and tablets for cash.

Dal Ben is represented by Jessica Zeldin of Rosenthal Monhait & Goddess PA and Carl L. Stine and Fei-Lu Qian of Wolf Popper LLP.

Counsel information for Outerwall was unavailable on Thursday.

The case is Dal Ben v. Outerwall Inc., case number unavailable, in the Court of Chancery of the State of Delaware.

--Additional reporting by Benjamin Horney. Editing by Kelly Duncan.

© 2016, Portfolio Media, Inc.


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