Compass Lexecon Clients Verizon and Hewlett-Packard Prevail in the First Two Post-Dell Delaware Appraisal Decisions

Compass Lexecon was retained in the first two cases decided following the Delaware Supreme Court's landmark decision in In re: Appraisal of Dell, Inc. (C.A. No. 9322-VCL). The courts in both cases reached fair value determinations below the respective deal prices resulting in victories for Compass Lexecon clients, Verizon and Hewlett-Packard. Compass Lexecon experts testified in both trials.

In re: Appraisal of AOL, Inc. (C.A. No. 11204-VCG) involved a stockholder appraisal action resulting from Verizon Communications Inc.'s $4.4 billion acquisition of AOL Inc. in 2015. AOL shareholders who voted in favor of the deal received the merger consideration of $50 per share. A group of shareholders dissented and demanded appraisal, claiming that the merger consideration substantially undervalued the firm and that their shares were worth $68.98. Compass Lexecon President Daniel R. Fischel testified at trial on behalf of Verizon that based on the economic evidence, the standalone fair value of AOL shares was below the $50 merger consideration. On February 23, 2018, Vice Chancellor Sam Glasscock III ruled that based on the Fischel analysis with certain minor adjustments, the fair value of AOL was $48.70 per share. Following the decision, both parties moved to modify the adjustments made by VC Glasscock. Professor Fischel submitted an affidavit opining, among other things, that petitioners’ expert’s adjustment methodologies were fundamentally flawed and that the adjustment proposed by VC Glasscock regarding a certain transaction that was in process as of the date of the acquisition would result in a value of $46.78 per AOL share. In an August 15, 2018 decision, VC Glasscock accepted Professor Fischel’s critiques of petitioners’ expert as well as the adjustment methodology proposed by Professor Fischel to account for the relevant transaction and revised his opinion on the fair value of AOL downwards to $47.08 per share. Professor Fischel was supported by a team at Compass Lexecon that included Rahul Sekhar, Robin Stahl, Jonathan Polonsky, Avisheh Mohsenin, Quinn Johnson, Andrew Lin and Nabila Lotayef. We worked with William D. Savitt, Nicholas Walter and Ryan A. McLeod of Wachtell, Lipton, Rosen & Katz and Kevin R. Shannon and Christopher N. Kelly of Potter Anderson & Corroon LLP who successfully represented Verizon.

In re: Appraisal of Aruba Networks, Inc. (C.A. No: 11448-VCL) involved the May 2015 acquisition of Aruba Networks, Inc. by Hewlett-Packard Company. Aruba shareholders who voted in favor of the deal received the merger consideration of $24.67 per share. A group of shareholders dissented and demanded appraisal, claiming that the merger consideration substantially undervalued the firm and that their shares were worth $32.67. Compass Lexecon expert Kevin Dages testified at trial on behalf of Hewlett-Packard, opining that the standalone fair value of Aruba shares was less than the $24.67 merger consideration. On February 15, 2018, Vice Chancellor J. Travis Laster concluded that the fair value of a share of Aruba was $17.13 per share, or 30 percent below the merger consideration. Dages was supported by a team at Compass Lexecon that included Tim McAnally, George Hickey, Jennifer Milliron and Ed Crane. We worked with Marc J. Sonnenfeld, Karen Pieslak Pohlmann and Laura Hughes McNally of Morgan, Lewis & Bockius LLP and Michael P. Kelly and Steven P. Wood of McCarter & English LLP who successfully represented Hewlett-Packard.