Archive: September 18, 2019

Delaware Supreme Court calculates Aruba’s fair value in an appraisal using deal price minus synergies, reversing lower court’s 30-day stock price calculation

By: Jessica Pearlman, Marina Mehrtens and Joseph Phelps

In Verition Partners Master Fund Ltd. and Verition Multi-Strategy Master Fund Ltd. v. Aruba Networks, Inc., C.A. No. 11448-VCL (Del. Ch. Apr. 16, 2019), the Delaware Supreme Court unanimously held that the Court of Chancery abused its discretion when it calculated the fair value per share of the common stock of Aruba Networks, Inc. (“Aruba”) in an appraisal proceeding. The Court of Chancery assessed Aruba’s per share value at $17.13 by using the 30-day average market price at which Aruba’s shares publicly traded before Aruba’s merger negotiation with Hewlett Packard Company (“HP”) became public. The Delaware Supreme Court found this improper and affirmed its practice of viewing merger consideration as evidence of fair value, calculating Aruba’s fair value per share as $19.10 (the deal price minus the portion of synergies left with the seller).

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