In re: Appraisal of Jarden Corp.
In the case In re: Appraisal of Jarden Corp., the Delaware Court of Chancery determined that in the sale of Jarden Corp. to Newell Rubbermaid Corp. for $13.0 billion, the fair share value was $48.31 – less than 1% above a valuation by expert and Analysis Group affiliate R. Glenn Hubbard, who was supported by a team from Analysis Group. The team also supported affiliate Marc Zenner, who testified about synergies and aspects of the sale process.
In this post-deal appraisal challenge by hedge funds Fir Tree Capital and Verition Partners, Vice Chancellor Joseph R. Slights III rejected fund investors’ claim that the sale of Jarden Corp. to Newell Rubbermaid Corp. was undervalued by over $2.7 billion. An expert in support of the hedge funds had claimed the cash and stock package accepted by Jarden should have been valued at $71.35 per share, not the deal price of $59.21.
Professor Hubbard provided deposition and trial testimony with support from a team that included Analysis Group Vice Presidents Michael Cliff, Lindsay Greenbaum, and Federico Temerlin. Professor Hubbard’s valuation of Jarden as of the merger date involved a variety of valuation indicators, including a discounted cash flow model, comparable companies, unaffected stock price, and merger price less synergies, and resulted in a fair value of $48.01.
The vice chancellor’s decision selected the unaffected stock market price as the best evidence of fair value and noted that Professor Hubbard’s “credible, unrebutted expert testimony” about this market evidence influenced his fair value determination. The court-determined valuation was 18% below the deal price, making it among the largest discounts to fair value in a Delaware Chancery opinion in a decade.
Following an appeal by the petitioners, the Delaware Supreme Court unanimously upheld the valuation, discussing Professor Hubbard’s testimony in detail and cautioning that its prior rulings did not rule out unaffected stock price as an indicator of fair value in a merger.