Fried Frank explains BMC Software and the Court’s Ongoing Incremental Path to Increased Reliance on the Merger Price in Appraisal Cases

The Delaware Court of Chancery has been on a slow but clear path toward increased reliance on the merger price in determining fair value in appraisal cases. While the court’s reliance on the merger price as the best indicator of fair value has been more frequent recently, the court appears to continue to struggle with a fundamental conflict in its approach to determining fair value.

On the one hand, the court has explicitly recognized that, when a merger price has been derived through an arm’s-length sale process, involving parties with a real economic stake in the outcome and during which … Read more

Fried Frank discusses Expansion of Aiding and Abetting Liability for “Gatekeepers” — Stewart v. Wilmington Trust

In Stewart v. Wilmington Trust (March 26, 2015), the Delaware Chancery Court characterized the outside auditor and the administrative management company for certain captive insurance companies as having a “gatekeeping role” for the companies. On that basis, the court refused to dismiss claims against them for aiding and abetting the alleged breaches of fiduciary duties of the companies’ directors. The decision expands the Chancery Court’s recent focus on the gatekeeper concept, underscoring the potential for aiding and abetting liability for advisors.

Focus on advisors who have a “gatekeeper” role. An advisor to a board may have aiding and … Read more

Fried Frank discusses Proposed Appraisal Statute Amendments, Which Would Permit Companies to Reduce Their Interest Cost

Proposed amendments to the Delaware appraisal statute announced recently are expected to be adopted by the Delaware Legislature. The stated purpose of the amendments is to reduce the recent rise in the volume of appraisal petitions. If adopted, the amendments would apply to merger agreements entered into on and after August 1, 2015.

The proposed amendments.

  • Option for companies to reduce interest cost (the “Interest Reduction Amendment”). This Amendment would provide an option for a company in an appraisal proceeding to pay a cash amount to the dissenting shareholders before the appraisal proceeding ends (an “Upfront Payment”). Statutory interest would

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