Appraisal Confusion: The Intended and Unintended Consequences of Delaware's Nascent Pristine Deal Process Standard

Abstract

In a merger, shareholders who believe the consideration being offered is too low have a statutory right to seek fair value for their shares through a judicial process called appraisal. In recent years, there has been an explosion in the number of appraisal actions leading some to argue that the remedy was being abused. In this Article, we argue that a recent line of cases by the Delaware Supreme Court that places heavy reliance on merger price as part of the judicial determination of fair value in appraisal proceedings is misguided and may lead to unintended consequences. Rather than rely on merger price in the determinations of fair value for publicly traded companies, courts should either eliminate the appraisal remedy for publicly traded corporations altogether or look to the unaffected stock market price of merger targets.