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"Appraising the 'Merger Price' Appraisal Rule". SSRN: https://ssrn.com/abstract=2888420.
The big issue: Why isn't the merger price necessarily fair value?
Nevertheless, the merger still could be susceptible to an appraisal valuation higher than the merger price.
"Appraising the Merger Price Appraisal Rule" (with Albert Choi), J. Law Econ.
In certain contexts, the court may be less likely to adopt the merger price valuation framework in an appraisal action.
Tying the appraisal value to the merger price effectively eliminates the potential beneficial value of a reserve price.
A discounted cash flow valuation based on management projections may result in fair value determinations higher than the merger price.
The Court's fair-value determination was not only 31% below the merger price, but also below the fair-value estimate of defendant's own expert.
Several of those valuations yielded a range that did not even reach $48 per share, and Deutsche Bank opined that the proposed merger price was fair.
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.
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These savings were generally greater for mergers between similarly-sized hospitals, and the post-merger price reductions were smaller in less competitive markets than in competitive ones.
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