In prior posts, we discussed the methodology employed by the Court in determining the fair value of shares under a challenge to a merger under 8 Del. C. § 262. As previously discussed in this post, the Court generally will utilize the discounted cash flow ("DCF") methodology in evaluating a target company's shares.
In the recent case of In re Appraisal of Ancestry.com, Inc., C.A. No. 8173-VCG (Jan. 30, 2015), the Court of Chancery determined the fair value of merger shares of Ancestry.com, Inc. Of note, each expert in this action relied exclusively upon the DCF methodology. The merger price was $32 a share. Petitioners' expert calculated the value to be at least $42.81 per share, whereas Respondent valued the shares at $30.63. The Court then provides a detailed analysis of how it ultimately determined that the value of Ancestry's shares was in fact $32 a share. (see Opinion, pp. 42-56).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
