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Golden Telecom, Inc. v. Global GT LP

Supreme Court of Delaware · 2010 · Corporations
11 A.3d 214 (2010)
Updated
CorporationsAppraisalFair ValueDGCL § 262(h)merger pricedeal pricegoing concern valueall relevant factors

Facts

After VimpelCom sought to acquire Golden Telecom, Golden's special committee rejected several offers before recommending a merger at $105 per share, which the board unanimously approved. The committee did not solicit other bidders and had notice that Altimo would not consent to an acquisition by any bidder other than VimpelCom. Most shareholders tendered or accepted $105 per share, but Global did not and instead pursued appraisal under DGCL § 262(h). In the appraisal action, the Court of Chancery valued Golden at $125.49 per share, leading Golden to argue that the court should have deferred to the merger price and that certain valuation inputs were erroneous, while Global argued Golden should have been bound to tax-rate data it had previously disseminated to shareholders.

Issue

In a statutory appraisal proceeding under DGCL § 262(h), must or should the Court of Chancery conclusively or presumptively defer to the merger price as evidence of fair value? Also, may a public company in appraisal be bound to company-specific valuation data it previously distributed to shareholders, and did the Court of Chancery abuse its discretion in its valuation here?

Rule

DGCL § 262(h) requires the Court of Chancery to perform an independent determination of fair value as of the merger date, exclusive of value arising from the accomplishment or expectation of the merger, and to take into account all relevant factors. Fair value means the value of the company to the stockholder as a going concern, not its value to a third party as an acquisition. Because the statute is unambiguous and appraisal is a flexible process, Delaware courts may not impose a rule requiring conclusive or presumptive deference to merger price, nor a rule binding public companies in appraisal to previously disseminated company-specific data.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.
Maple Signal Networks, a Delaware corporation headquartered in Denver, merged into a buyer after a lengthy arm's-length negotiation. In the appraisal action, the surviving corporation argues that because the sales process was clean and most stockholders accepted $42 per share, the court must presume $42 is fair value unless the dissenters prove otherwise.

How should the appraisal court rule?

Explanation. Under DGCL § 262(h) as interpreted by the majority opinion, the Court of Chancery must make an independent determination of fair value and consider all relevant factors. It may not apply a conclusive or presumptive rule deferring to merger price, even where the process appears pristine and unchallenged.