Delaware Chancery Court Cites Analysis Group Academic Affiliate R. Glenn Hubbard's Valuation Figure in Solera Merger Appraisal Ruling
August 2, 2018
In the recent appraisal dispute of Solera Holdings Inc.'s 2016 sale to private equity firm Vista Equity Partners LP, Chancellor Andre G. Bouchard favorably cited reports by Analysis Group affiliate R. Glenn Hubbard as supporting evidence in the decision.
Stockholders who opposed the purchase price of $55.85 per share sought a court appraisal, claiming that the fair value of their shares was $84.65 per share. On behalf of Solera and supported by an Analysis Group team – including Managing Principal Bruce F. Deal, Vice President Michael Cliff, and Manager Andrew Clarke – Professor Hubbard appraised the shares of common stock. He testified at trial that the deal price, adjusted for synergies ($53.95), provided the most reliable evidence of fair value. This was corroborated by a nearly identical valuation from a discounted cash flow (DCF) analysis that properly accounted for the investment needed to support growth in the terminal period.
After considering nearly 1,000 trial exhibits, including 14 deposition transcripts and the live testimony of four fact witnesses and three expert witnesses, Chancellor Bouchard ruled that he “independently has come to the same conclusion” as “respondent and its highly credentialed expert” that the “market-generated Merger price, adjusted for synergies” is the “best evidence of Solera's value” as of the date the merger. While the Solera ruling is a continuation of the string of cases using deal price as the anchor point for fair value (see CKx and PetSmart), it is perhaps the first to subtract synergies in a private equity transaction.