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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:

Lawyers' fight over appraisal case fees stimulates court consideration of policy for orderly control


See subsequent court decision addressing the issues reported below:


Source: Law360, November 4, 2016 article

Grant, Ashby Spar Over Lead In $3B Rouse Deal Appraisal

By Matt Chiappardi

Law360, Wilmington (November 4, 2016, 8:12 PM EDT) -- A battle over which law firm would lead the judicial appraisal of Brookfield Asset Management Inc.’s $2.8 billion buyout of Rouse Properties Inc. unfolded Friday before the Delaware Chancery Court with Grant & Eisenhofer PA clashing with Ashby & Geddes PA over how the leadership structure should be set.

During a teleconference before Vice Chancellor Joseph R. Slights III, Stuart M. Grant of Grant & Eisenhofer argued that Ashby & Geddes’ proposal that the firms litigate the case in tandem would essentially give it a “free ride” and create a “bizarre and unworkable structure” that would set ”an awful precedent” for future multipetitioner appraisal actions.

Grant called Ashby & Geddes proposal a “money-motivated ploy” for its client, Rouse investor Brookdale International Partners LP, to get out of paying attorneys fees for his firm, and argued that the leadership structure Grant & Eisenhofer proposes still has Ashby & Geddes participating in every aspect of the case.

“No one is looking to take away Brookdale’s right to participate,” Grant told Vice Chancellor Slights. “Brookdale says they’re not satisfied with a seat at the table. They want their own table.”

Andrew D. Cordo of Ashby & Geddes strongly objected to Grant’s contentions, arguing that a free ride was “categorically not what was happening here.”

Cordo argued that Brookdale, which had a $25 million stake in Rouse, has its own case to pursue and hired Ashby & Geddes to do it. For it to be lumped into a leadership structure with Grant & Eisenhofer would essentially mean it’s being drafted as an involuntary client, subject to however the firms wants to litigate the case, and on the hook for its fees, Brookdale argued.

“If Brookdale wanted Grant & Eisenhofer to do all the work in this case, it would have hired Grant & Eisenhofer,” Cordo told Vice Chancellor Slights.

The issue stems over petitions for judicial appraisal Brookdale and others lodged in the wake of Brookfield unit Brookfield Property Partners LP’s deal earlier this year to buy out the shares of Rouse it didn’t already own for $18.25 apiece.

Brookdale, which is managed by Weiss Asset Management, was the first to petition for appraisal, followed by several other shareholders including Hudson Bay Master Fund Ltd. and Sunrise Partners LP. Grant said Friday that the investors who’d retained his firm held 74 percent of the shares up for appraisal compared with Brookdale’s 24 percent.

Under Delaware law, shareholders can seek to have the Chancery Court examine a deal they think might have been valued incorrectly, and be awarded the difference if the court finds the transaction price was too low.

Typically, the cases involve several petitioners and the court consolidates them under one docket, appointing one or more law firms to take the lead in the litigation.

In this instance, Ashby & Geddes says it is seeking a posture similar to how it and Grant & Eisenhofer co-litigated the Metromedia International Group appraisal in 2007, with no lead counsel appointed and both firms taking the reins on the case and each client only paying its respective counsel.

Vice Chancellor Slights did agree to consolidate the Rouse petitions Friday but left open the lead counsel question, saying he wanted to “stew” on the issue.

“I want to step back and ponder a little bit the ramifications on this case and maybe beyond this case,” the vice chancellor said.

Grant had argued that if Ashby & Geddes’ request were granted, nothing would stop other petitioners in other cases with much smaller stakes from doing the same.

Cordo countered that the slippery-slope argument was not a “realistic concern and this case shouldn’t turn on a hypothetical.”

Vice Chancellor Slights did not appear to fully agree.

“It might be a concern in terms of how folks read this precedent,” the vice chancellor said.

Brookdale is represented by Stephen E. Jenkins, Andrew D. Cordo and Marie M. Degnan of Ashby & Geddes PA.

Hudson Bay, Sunrise and the other petitioners are represented by Stuart M. Grant, Cynthia A. Calder and Kimberly A. Evans of Grant & Eisenhofer PA.

The cases are case numbers 12549, 12609, 12611, 12617 and 12674 in the Court of Chancery of the State of Delaware.

--Additional reporting by Chelsea Naso. Editing by Brian Baresch

© 2016, Portfolio Media, Inc.


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