DealLawyers.com Blog

Here’s an excerpt from this DealBook column by Steven Davidoff Solomon (we continue to post memos on the decision in our “Appraisal Rights” Practice Area):

The law firm of Wachtell, Lipton, Rosen & Katz has criticized the decision for forcing a buyer to pay a 30 percent higher price in a “fully shopped” deal. According to the law firm, this decision may lead to shareholders’ “losing out” as private equity firms fear to do deals and hedge funds seek to win big on appraisal awards. My DealBook colleague Andrew Ross Sorkin wrote that the decision was “likely to lead to a spate of lawsuits and second-guessing over the price of the next big mergers and acquisitions.” Matt Levine at Bloomberg View criticized the opinion’s methodology for its reliance on Dell being the only one willing to pay this price in the marketplace and moreover willing to take the risk of taking the company private.

Much of the criticism has centered on the fact that the Delaware judge — in deciding that the fair value of Dell shares was $17.62 a share, far above the $13.65 paid by the buyout consortium led by the company’s founder, Michael S. Dell — found that there was no significant fault with the conduct of the company’s directors and that no other bidder had emerged for Dell shares.

So should we be worried that this decision will change buyouts? The answer is probably no, because of the deeply weird nature of appraisal and this case.