Case Title: Fir Tree Value Master Fund v. Jarden Corp

Citation: 

Docket Number: 

State: delaware

Court: Delaware Supreme Court

Date: 2020-07-09T00:00:00Z

Document:
IN THE SUPREME COURT OF THE STATE OF DELAWARE 
 
FIR TREE VALUE MASTER  
§ 
FUND, LP, FIR TREE CAPITAL 
§ 
OPPORTUNITY MASTER FUND, § 
No. 454, 2019 
LP, and VERITION MULTI-  
§ 
STRATEGY MASTER FUND LTD., § 
 
 
 
 
 
 
§  
Court Below: Court of Chancery 
 
Petitioners Below,  
 
§  
of the State of Delaware 
 
Appellants,  
 
 
§  
 
§  
C.A. No. 12456 
v. 
 
 
 
 
§ 
 
 
 
 
 
 
 
 
§ 
 
JARDEN CORPORATION, 
 
§ 
 
     
 
 
 
 
 
 
 
§ 
 
     
Respondent Below,  
 
§ 
 
 
Appellee. 
 
 
 
§ 
 
 
 
 
 
 
 
Submitted:  April 15, 2020 
Decided:  
July 9, 2020 
 
Before SEITZ, Chief Justice; VALIHURA, VAUGHN, TRAYNOR, and 
MONTGOMERY-REEVES, Justices, constituting the Court en Banc. 
 
Upon appeal from the Court of Chancery.  AFFIRMED. 
 
Michael J. Barry, Esquire, Kimberly A. Evans, Esquire, Kelly L. Tucker, Esquire, 
Vivek Upadhya, Esquire, GRANT & EISENHOFER P.A., Wilmington, Delaware; 
Attorneys for Petitioners-Appellants Fir Tree Value Master Fund, LP, Fir Tree 
Capital Opportunity Master Fund, LP, and Verition Multi-Strategy Master Fund 
Ltd.   
 
Srinivas M. Raju, Esquire, Brock E. Czeschin, Esquire, Robert L. Burns, Esquire, 
Sarah A. Clark, Esquire, Matthew W. Murphy, Esquire, RICHARDS, LAYTON & 
FINGER, P.A., Wilmington, Delaware; Michael J. McConnell, Esquire, Ashley F. 
Heintz, Esquire, Robert A. Watts, Esquire, JONES DAY, Atlanta, Georgia; 
Attorneys for Respondent-Appellee Jarden Corporation.  
 
 
2 
 
 
SEITZ, Chief Justice:     
 
Martin Franklin, the Chief Executive Officer and co-founder of Jarden 
Corporation, negotiated the corporation’s sale to Newell Brands for $59.21 per share 
in cash and stock.  Several large Jarden stockholders refused to accept the sale price 
and petitioned for appraisal in the Court of Chancery.  In a lengthy opinion, the Court 
of Chancery found that, of all the valuation methods presented by the parties’ 
experts, only the $48.31 unaffected market price of Jarden stock could be used 
reliably to determine the fair value.  The court placed little or no weight on other 
valuation metrics because the CEO dominated the sales process, there were no 
comparable companies to assess, and the parties’ experts presented such wildly 
divergent discounted cash flow models that, in the end, the models were unhelpful 
to the court.            
On appeal, the petitioners argue the Court of Chancery erred as a matter of 
law when it adopted Jarden’s unaffected market price as fair value because it ignored 
what petitioners claim is a “long-recognized principle of Delaware law” that a 
corporation’s stock price does not equal its fair value.  They also claim that the court 
abused its discretion by refusing to give greater weight to a discounted cash flow 
analysis populated with data selected by petitioners, ignoring market-based evidence 
of a higher value, and refusing to use the deal price as a “floor” for fair value.   
 
3 
 
 
We affirm the Court of Chancery’s judgment finding $48.31 as the fair value 
of each share of Jarden stock as of the date of the merger.  There is no “long-
recognized principle” that a corporation’s unaffected stock price cannot equate to 
fair value.  Although it is not often that a corporation’s unaffected market price alone 
could support fair value, the court here did consider alternative measures of fair 
value—a comparable companies analysis, market-based evidence, and discounted 
cash flow models—but ultimately explained its reasons for not relying on that 
evidence.  Finally, Jarden’s sale price does not act as a valuation floor when the 
petitioners successfully convinced the court that the deal price resulted from a flawed 
sale process, and the court found Jarden probably captured substantial synergies in 
the sale price.       
I. 
Martin Franklin co-founded Jarden in the early 2000’s.1  Jarden operated as a 
decentralized holding company with a large portfolio of consumer product brands in 
separate operating companies.  Franklin served as CEO and board chairman until 
2011 when he stepped away from day-to-day operations but remained in charge of 
capital distribution and M&A activity.  By all accounts, Jarden was successful.  
Towards the end of 2015, Jarden’s market capitalization put it among the top 20% 
                                          
 
1 We take the essential facts from the Court of Chancery’s opinion in In re Appraisal of Jarden 
Corp., 2019 WL 3244085 (Del. Ch. July 19, 2019).   
4 
 
 
of all publicly traded firms in the United States.  More than twenty professional 
financial analysts followed Jarden.  Jarden’s stock traded in a semi-strong efficient 
market.2  While CEO, Franklin led Jarden’s acquisition of over forty companies and 
brands focused in niche markets where the brand could expand globally.  In 2015, 
Jarden made two of its largest acquisitions, including the parent of Jostens, Inc., for 
$1.5 billion.   
Like Jarden, Newell operated as a large consumer products company with a 
vast portfolio of products with household names.  As a holding company, Newell 
owned several portfolio businesses that functioned essentially as independent 
companies.  In 2011, under its new CEO, Michael Polk, Newell implemented a 
strategic plan that included Project Renewal.  By using an integrated operating 
company model, Project Renewal sought to streamline Newell’s business structure 
and decrease costs by delayering the business.  In 2014, Newell embarked on a 
strategy of pursuing “transformational M&A.”3  Newell engaged Centerview 
Partners to generate a list of possible targets and to arrange preliminary meetings.  
                                          
 
2 See Verition Partners Master Fund Ltd. v. Aruba Networks, Inc., 210 A.3d 128, 138 n.53 (Del. 
2019) (“[T]he semi-strong version assumes that markets reflect only all publicly available 
information whereas the strong version assumes that markets reflect all information . . . .”); Dell, 
Inc. v. Magnetar Glob. Event Driven Master Fund Ltd, 177 A.3d 1, 7 (Del. 2017) (“[T]he record 
suggests the market for Dell stock was semi-strong efficient, meaning that the market’s digestion 
and assessment of all publicly available information concerning Dell was quickly impounded into 
the Company’s stock price.”). 
3 Jarden, 2019 WL 3244085, at *8. 
5 
 
 
Jarden made the list of targets, but Newell had some reservations because Jarden 
operated in niche categories, and Polk wanted big, global categories.   
While leading Jarden, Franklin had several other ongoing business ventures, 
including Platform Specialty Products Corporation, which had financial backing 
from investor William Ackman.  In July 2015, when Franklin met with Roland 
Phillips of Centerview about one of those other ventures, Phillips mentioned that 
Polk wanted to meet Franklin.  Franklin understood that Polk would likely want to 
discuss a Newell/Jarden transaction and said “he ‘would gladly take equity, [and he] 
ha[d] no issue with someone else running the combined business.’”4  Later in the 
month, Franklin expressed to Ackman his willingness to sell Jarden so he could 
devote more energy to his other businesses.  Ackman emailed Warren Buffet and 
wrote that Franklin would entertain a negotiated sale of Jarden.  At the time, 
however, “Franklin was not authorized by the Board to entertain discussions 
regarding a sale of Jarden nor did he disclose to the Board his discussions with 
Phillips or Ackman.”5 
Franklin and Polk first met at an investor conference in September 2015.  
Their conversation exposed different perspectives regarding their roles.  As the court  
                                          
 
4 Id. at *7 (citation omitted) (alterations in original). 
5 Id. 
6 
 
 
found, “Franklin focused on M&A, while Polk concentrated on organic growth.”6  
Franklin confirmed that his team was open to “strategically connecting” with 
Newell, and they agreed to continue the conversation.7  Polk reported to Newell’s 
board that Franklin “cut straight to the chase about being willing to sell his company 
and offered a deeper discussion over the next few weeks.”8  Franklin did not inform 
the board about his discussions until individual phone calls several days later. 
Newell was interested in acquiring Jarden in part because it believed it could 
apply the same “playbook” from Project Renewal to Jarden’s operations to provide 
scale and cost synergies.9  Franklin and Polk met again in October on Franklin’s 
yacht in Miami, referred to as the “Boat Meeting.”  Franklin provided some informal 
advance notice to board members, but did not have approval to meet with Newell or 
discuss financial parameters of a sale, yet that is what he did: 
Franklin advised Newell’s team that Newell’s offer for Jarden would 
have to “start with a six” and would have to include a significant cash 
component if Newell’s goal was to gain control of the combined 
company.  According to Franklin, he arrived at this number based, in 
part, on his understanding of Jarden’s value as determined in 
connection with the Jostens acquisition which was underway as of the 
Boat Meeting.  He also wanted to state a number he believed Newell 
had the “ability to pay,” and he assumed a price of $70.00 or higher was 
“laughable.”  At the time of the Boat Meeting, Jarden’s stock was 
trading in the high $40s.  Therefore, by this metric, a price “starting 
with a six,” by any measure, would be a premium for Jarden’s 
                                          
 
6 Id. at *8. 
7 Id. 
8 Id. at *9. 
9 Id. 
7 
 
 
stockholders.  According to Franklin, even if $60 per share undervalued 
Jarden, Franklin believed Jarden stockholders would reap additional 
value by sharing in the upside of the Merger with stock in the combined 
company.10   
Polk expressed hope that the merger would produce substantial synergies.  While 
the Jarden team was initially more conservative, it also grew excited about the 
potential synergies.   
 
Within a few days, Franklin briefed the board on the meeting, including the 
need for an offer to start with a “six.”11  The board supported and encouraged further 
discussions within those parameters.  Franklin contacted his personal banker at 
Barclays after the Boat Meeting, said he had expressed to Newell he would sell for 
$60 per share, and asked the banker to develop an “analysis supporting a transaction 
in the range of $60-69 per share.”12   
 
As the parties continued discussions, Jarden was closing the Jostens 
acquisition.  On October 14, “Jarden announced it would acquire Jostens and finance 
the acquisition through an equity offering priced at $49.00 per share and additional 
debt.”13  The next day, Jarden presented five-year projections to potential lenders 
reflecting 3.1% net sales growth.  The market reacted negatively to the Jostens 
acquisition.  Jarden’s stock dropped about 12% over the following two weeks, and  
                                          
 
10 Id. at *10 (footnotes omitted). 
11 Id. 
12 Id.  Jarden formally engaged Barclays Capital Inc. in November 2015. 
13 Id. at *11. 
8 
 
 
analysts reduced their price targets.  To project confidence, Jarden’s board approved 
a $50 million stock buyback capped at $49.00 per share.  Jarden repurchased stock 
over two days, averaging $45.96 per share on the first, and $48.05 per share on the 
second. 
 
On October 15, Franklin had Jarden enter into a mutual confidentiality and 
standstill agreement with Newell.  Without board authorization, the parties began 
due diligence and continued negotiations on deal components, including Franklin’s 
idea of Jarden representatives taking seats on the post-merger board. 
 
On October 22, Franklin and two other Jarden executives, Ian Ashken and 
James Lillie, met with Newell representatives and shared nonpublic information, 
including a set of three-year financial projections that forecast 5% revenue growth—
the high end of Jarden’s historic guidance range of 3% to 5%.14  At trial, Lillie 
justified the 5% target because it was a “round number[].”15  Jarden, however, 
internally projected growth “in the fours.”16  And because Newell recognized the 
                                          
 
14 As the court found, “Jarden had set the market standard for average annual revenue growth 
within the 3% to 5% range,” which Jarden intended to reflect its organic growth.  Id. at *12.  Jarden 
also included revenue from “tuck-in” acquisitions, where its portfolio companies acquired a target, 
although public holding companies generally do not include tuck-in acquisitions as organic 
growth.  Regardless, the court found that even excluding such acquisitions Jarden generally 
performed within its target growth range.   
15 Id. (alteration in original). 
16 Id. 
9 
 
 
aggressiveness of these numbers, it “determined that it was best to stick with the 
3.1% growth projections as stated” to potential lenders for the Jostens acquisition.17  
On October 28, the board held its first formal meeting to discuss a potential 
Newell transaction.  There was no discussion of a pre-signing market check.  Instead, 
the board directed that negotiations continue with Newell.  In November, when 
Barclays asked Jarden to extend projections to 2020, Jarden instructed it to continue 
to use the 5% growth rate (the “November Projections”).  Barclays used the 
November Projections to analyze the transaction and for its fairness opinion.   
 
Newell retained Goldman Sachs and Bain & Company as additional financial 
advisors.  Bain initially assessed Jarden’s historic organic growth rate, excluding 
tuck-in acquisitions, at 3.5% at most, and later estimated projected potential 
synergies of $700-800 million.  Centerview projected potential synergies of $500-
$900 million.  When diligence revealed that almost all of Jarden’s acquisitions had 
been left standalone, Newell saw a substantial opportunity to replicate Project 
Renewal’s success with Jarden’s operating company structure. 
 
Despite the higher estimates of potential synergies, Newell structured the deal 
based on $500 million in estimated annual cost synergies, which priced Jarden at 
$57-$61 per share.  After board authorization, Newell offered $57 per share, with 
                                          
 
17 Id.  Also at the October 22 meeting, without board authorization, Newell and Franklin began 
discussing specifics about change-in-control payments due to Franklin, Ashken, and Lillie. 
10 
 
 
$20 in cash plus a fixed exchange ratio of Newell shares.  The offer represented an 
18% premium over Jarden’s then-current share price.18  Jarden’s board rejected the 
offer and authorized Franklin to seek a higher offer, but not to make a counteroffer.  
When the negotiating teams met on November 16, however, Franklin made a 
counteroffer of $63 per share with $21 in cash.  Newell balked, the meeting ended, 
and the deal almost died. 
 
Then on November 21, Newell came back with an offer of $21 in cash and 
target price of $60 per share.  The next day, Jarden’s board met, decided to accept 
the offer, and granted Newell exclusivity during the confirmatory due diligence 
period.  Franklin believed that the offer, a 13.5x EBITDA multiple, was the highest 
multiple Jarden would ever trade.  And it had just acquired Jostens at a 7.5x EBITDA 
multiple.  The board also found that Jarden stockholders stood to benefit from 
synergies above the $500 million by retaining shares in the combined company.  The 
board’s exclusivity agreement disabled any market check.  The board thought that 
Newell was the best and most likely acquirer, and no other companies had the same 
fit or ability to pay.   
 
When the parties met to hammer out the details, they understood that Newell’s 
management team would continue to lead the combined companies.  Newell wanted  
                                          
 
18 The offer also included an expectation that Franklin would join the post-merger board of 
directors and was open to increasing the size of the board for additional directors. 
11 
 
 
Franklin on the board as a sign of confidence to the market.  Franklin, Ashken, and 
Lillie also agreed to a consulting agreement with non-competition covenants in 
exchange for a $4 million annual fee for three years.   
 
News of the deal leaked on December 7, but not who was buying whom or 
the deal price.  Newell’s stock price increased, Jarden’s stock price decreased, and 
they renegotiated the stock-for-stock ratio.19  Jarden’s board met on December 10 to 
discuss the negotiations and whether the transaction still made sense.  The minutes 
emphasized that Jarden was not for sale and the sole alternative was remaining 
independent.  The board discussed the change-of-control payments for the first time.  
And the board’s compensation committee eventually recommended that the board 
award Franklin, Ashken, and Lillie their 2017 and 2018 restricted stock awards, 
which would not have been due under the existing employment agreements. 
 
At the next Jarden board meeting on December 13, Barclays presented the 
revised deal terms and an oral opinion that the merger was fair from a financial point 
of view.  The board approved the merger.  It also approved the separation agreements 
and amendments to the employment agreements with Franklin, Ashken, and Lillie.  
On the same day, the Newell board met, considered financial projections assuming 
a 3.1% revenue growth rate, and approved the deal.   
                                          
 
19 Had the parties kept the original ratio, Newell would have paid $120 million more at an implied 
price of $61.73 per share.  See Opening Br. at 10–11; Answering Br. at 17 n.91. 
12 
 
 
The parties announced the merger on December 14, 2015.  Jarden’s stock 
price jumped, and it eventually converged on the deal price by the time of closing.  
Newell’s stock price declined by nearly 7%.  According to the court, after accounting 
for market fluctuations, Newell’s stock price reflected a neutral market response, at 
best. 
In early 2016, Jarden reported its 2015 year-end results, which included 
considerable losses to operating income and net income compared to recent years; 
first quarter 2016 results, which were weak; and the final 2016 budget, which was 
adjusted downward due to a decline in year-end revenue.  During March and April, 
before the merger closed, Jarden prepared updated projections for 2016-2020 (the 
“April Projections”) that, in part, forecast a 4.4% compound annual revenue growth 
rate.  Jarden and Newell stockholders approved the merger on April 15, 2016.  As 
of the closing, the mix of cash and stock valued Jarden at $59.21 per share. 
Petitioners sought appraisal.  The Court of Chancery held a four-day trial with 
twenty-five fact witnesses and three expert witnesses.  For the petitioners, Dr. Mark 
Zmijewski testified and presented a comparable companies analysis and a 
discounted cash flow analysis.  He relied primarily on his comparable companies 
analysis to support a fair value of $71.35 per share on the merger date.  For Jarden, 
Dr. Glenn Hubbard testified and considered market evidence of Jarden’s unaffected 
stock price and the merger price less synergies.  He also examined comparable 
13 
 
 
companies and presented a DCF analysis.  Ultimately, he concluded that Jarden’s 
fair value on the merger date was $48.01 per share based on his DCF analysis.   
The Court of Chancery stayed the case until our Court issued the decision in 
Verition Partners Master Fund Ltd. v. Aruba Networks, Inc.20  After considering the 
Aruba decision and receiving further submissions from the parties, the Court of 
Chancery found the fair value of each share of Jarden stock on the closing date of 
the merger at $48.31 using Jarden’s unaffected market price.    
First, the court offered its “takeaway” from our recent decisions in DFC 
Global Corp. v. Muirfield Value Partners, L.P.,21 Dell, Inc. v. Magnetar Global 
Event Driven Master Fund Ltd,22 and Aruba—that the Court of Chancery follow the 
appraisal statute’s directive to consider “all relevant factors” and to base its fair value 
decision on the record made by the parties at trial.23  Second, the court decided not 
to use the deal price less synergies as a reliable indicator of fair value.  Although 
“mindful of our Supreme Court’s guidance in Dell” that a “robust sale process” can 
discover a corporation’s fair value, the court held that the Jarden sale process 
“raise[d] concerns” and “left much to be desired.”24  As the court held, Jarden’s CEO 
acted with “little to no oversight by the Board” and volunteered “a price range the 
                                          
 
20 210 A.3d 128 (Del. 2019). 
21 172 A.3d 346 (Del. 2017). 
22 177 A.3d 1 (Del. 2017). 
23 Jarden, 2019 WL 3244085, at *2. 
24 Id. at *3, *23–24. 
14 
 
 
Board would accept to sell the Company before negotiations began in earnest.”25  
Also critical, according to the court, was the lack of a pre-signing or post-signing 
market check and “the difficulty in assessing the extent to which Newell ceded 
synergies to Jarden in the Merger.”26  Further, there was no dispute that “synergies 
were realized in the merger, as one would expect when two strategic partners 
combine.”27  After reviewing the evidence, the court decided to “place less weight 
on this market-based valuation approach in this case because the sales process was 
not well-conceived or well-executed and the expert analysis of the transaction 
synergies raised more questions than it answered.”28  
Third, the court rejected the petitioners’ comparable companies analysis of 
$71.35 per share.  The court found the credibility of this analysis depended “on the 
quality of the comparables.”29  The court concluded that “Jarden had no reliable 
comparables,” in part because the petitioners’ expert failed to support his selection 
of peer group companies.30  Without a valid peer set, the court did not give the 
analysis any weight.  
                                          
 
25 Id. at *3. 
26 Id. at *25. 
27 Id. 
28 Id. at *26. 
29 Id. at *3. 
30 Id. at *3, *34–35. 
15 
 
 
Fourth, the court refused to adopt either parties’ DCF models because of the 
wildly divergent fair value conclusions.  In the DCF analyses, Dr. Zmijewski valued 
Jarden between $70.36 and $70.40 per share, while Dr. Hubbard valued Jarden at 
$48.01 per share.31  The court noted that similar valuations indicated upwards of a 
$5 billion difference in market value.32  And the experts’ inputs used to populate 
their DCF models were similarly divergent.  For instance, Dr. Zmijewski advocated 
a 4.9% terminal investment rate, while Dr. Hubbard advocated a 33.9% rate.33  That 
disagreement accounted for 87% of the difference in their DCF values.34  Instead of 
relying exclusively on either expert’s analysis, the court selected its own inputs that 
led to a DCF fair value of $48.13 per share—a result it ultimately chose not to rely 
on as a primary source for its fair value award.   
After expressing significant discomfort with the comparable companies and 
DCF valuation models, the court decided to use Jarden’s unaffected stock price—
$48.31 per share—as the best evidence of Jarden’s fair value.  Relying in part on an 
                                          
 
31 Id. at *36.  
32 Id. at *1 (noting that “[t]o put the disparity in context, Dr. Zmijewski’s valuation [of $71.35 per 
share] implies that the market mispriced Jarden by over $5 billion,” when compared to the share 
price of $48.31). 
33 The terminal investment rate is the amount of investment needed to support the terminal growth 
rate in a discounted cash flow analysis.  The Court of Chancery used the convergence model, which 
is “a reflection of the widely-accepted assumption that for companies in highly competitive 
industries with no competitive advantages, value-creating investment opportunities will be 
exhausted over a discrete forecast period, and beyond that point, any additional growth will be 
value-neutral” leading to the “return on new investment in perpetuity [converging] to the 
company’s cost of capital.”  In re John Q. Hammons Hotels Inc. S’holder Litig., 2011 WL 227634, 
at *4 n.16 (Del. Ch. Jan. 14, 2011). 
34 Jarden, 2019 WL 3244085, at *39. 
16 
 
 
event study performed by Jarden’s expert, the court found that the market for Jarden 
stock was informationally efficient, meaning the corporation’s stock price quickly 
reflected publicly available information.  Further, according to the court, the parties 
did not have material nonpublic information that would not be reflected in Jarden’s 
unaffected stock price.  The court also found that minority and conglomerate 
discounts should not be applied.  And the unaffected market price was not stale as 
of the merger date because the evidence showed that Jarden’s financial prospects 
worsened between the unaffected trading date and closing the merger.    
In a motion for reargument, the petitioners pointed out errors in the court’s 
DCF analysis.  According to the petitioners, if the court had calculated properly its 
DCF valuation using the court’s factual determinations, it would have arrived at a 
fair value between $61.59 and $64.01 per share.  The court adopted all of the 
petitioners’ proposed corrections.  But the court also adopted Jarden’s request to 
change its DCF model’s terminal investment rate because the court’s prior DCF 
model “improperly depart[ed] from” the principle which it endorsed—that return on 
new invested capital should equal the company’s weighted average cost of capital.35  
After all the changes, the court calculated a revised DCF value of $48.23 per share 
on the merger closing date.  Although the court did not rely on its DCF analysis, the 
                                          
 
35 In re Appraisal of Jarden Corp., 2019 WL 4464636, at *3 (Del. Ch. Sept. 16, 2019). 
17 
 
 
court remarked that the revised DCF value corroborated its $48.31 per share fair 
value award. 
II. 
In an appraisal action, the Court of Chancery “shall determine the fair value 
of the shares exclusive of any element of value arising from the accomplishment or 
expectation of the merger or consolidation” plus interest.36  Fair value “is a 
jurisprudential, rather than purely economic, construct,” meaning fair value is a law-
created valuation method that excludes elements of value that would normally be 
captured in economic models.37  Under the appraisal statute, when “determining such 
fair value, the Court shall take into account all relevant factors.”38  The court’s task 
is “to value what has been taken from the shareholder.”39  The court must assess the 
fair value of each share of stock “on the closing date of the merger” and determine 
the value of the pre-merger corporation as a going concern.40  “[B]oth sides have the 
burden of proving their respective valuation positions by a preponderance of [the] 
evidence.”41  In the end, the trial judge must determine fair value,42 and “fair value 
                                          
 
36 8 Del. C. § 262(h). 
37 DFC, 172 A.3d at 367 (“[T]he definition of fair value used in appraisal cases is a jurisprudential 
concept that has certain nuances that neither an economist nor market participant would usually 
consider when either valuing a minority block of shares or a public company as a whole.”).  
38 8 Del. C. § 262(h). 
39 Aruba, 210 A.3d at 132 (quoting Cavalier Oil Corp. v. Hartnett, 564 A.2d 1137, 1144 (Del. 
1989)). 
40 Dell, 177 A.3d at 20. 
41 M.G. Bancorporation, Inc. v. Le Beau, 737 A.2d 513, 520 (Del. 1999). 
42 Dell, 177 A.3d at 20. 
18 
 
 
is just that, ‘fair.’  It does not mean the highest possible price that a company might 
have sold for.”43   
On appeal, the petitioners have jettisoned their lead valuation argument in the 
Court of Chancery—a comparable companies analysis of $71.35 per share.  They 
now argue that the court erred by using Jarden’s unaffected market price when deal 
price or discounted cash flow models offered better fair value alternatives.  
According to the petitioners, the court erred as a matter of law “because it ignore[d] 
the long-recognized principle in Delaware law, reinforced in Aruba, that stock price 
does not equal fair value.”44  Petitioners also argue that the Court of Chancery abused 
its discretion by using unaffected market price when the deal price resulted from 
negotiations by insiders who had access to material confidential information about 
Jarden’s financial outlook and were incentivized to engage in price discovery.  
Further, the petitioners assert that the court erred by ignoring the court’s DCF 
analysis which, except for the court’s erroneous change on reargument of the 
terminal investment rate, would have led to a fair value range of $61.59-$64.01 per 
share.  They also argue that the court ignored market-based evidence of Jarden’s 
value, contemporaneous analyst reports, and valuation experts.  Underlying all of 
their arguments is the claim that the court should have at least treated the deal price 
                                          
 
43 DFC, 172 A.3d at 370. 
44 Opening Br. at 3. 
19 
 
 
as a valuation floor instead of rejecting it outright because of the flawed negotiation 
process.   
Jarden counters that the petitioners relied primarily on a comparable 
companies analysis but did not come forward with comparable companies that could 
be adjusted reliably, failed to respond meaningfully to Jarden’s market-based 
analysis, and refused to accept the court’s ultimate conclusion that the DCF analyses 
could not be trusted because of the wildly divergent fair value conclusions.  It argues 
that the record supports the efficiency and reliability of the unaffected market price.  
Unlike in Aruba, says Jarden, there was no material nonpublic information that 
would impact the market’s ability to assess Jarden’s value.  Further, they contend 
that the fair value should be below the deal price because the court found the deal 
price included synergies captured by Jarden.  Otherwise, Jarden argues the court 
considered and rejected the petitioners’ arguments and grounded its decision in the 
record. 
 The arguments on appeal coalesce around three themes—the court erred as a 
matter of law and abused its discretion by relying on unaffected market price; the 
court should have treated the deal price as a fair value floor; and the court constructed 
its own flawed DCF model to corroborate its fair value.  We review errors of law de 
novo.45  We review a statutory appraisal award for abuse of discretion and “grant 
                                          
 
45 SmithKline Beecham Pharm. Co. v. Merck & Co., Inc., 766 A.2d 442, 447 (Del. 2000). 
20 
 
 
significant deference to the factual findings of the trial court.”46  “We defer to the 
trial court’s fair value determination if it has a ‘reasonable basis in the record and in 
accepted financial principles relevant to determining the value of corporations and 
their stock.’”47  
A. 
 
Turning to the first ground for error—the Court of Chancery’s reliance on 
Jarden’s unaffected market price for fair value—the petitioners argue that our recent 
Aruba decision foreclosed as a matter of law the court’s use of unaffected market 
price to support fair value.48  The Court of Chancery recognized correctly, however, 
neither Aruba nor our other recent appraisal decisions ruled out using any recognized 
valuation methods to support fair value.   
Our Aruba decision followed closely on the heels of two other important 
Supreme Court appraisal decisions—DFC Global Corp. and Dell.  In DFC, we 
reviewed the appraisal statute and how valuation methods evolved following the 
Court’s decision in Weinberger v. UOP, Inc.49  The thrust of the DFC decision took 
issue with the Court of Chancery’s reasoning for rejecting deal price as relevant to 
fair value.  We also questioned inputs made by the court in its DCF analysis.  
                                          
 
46 DFC, 172 A.3d at 363. 
47 Dell, 177 A.3d at 5–6 (quoting DFC, 172 A.3d at 348–49). 
48 Opening Br. at 3 (“The trial court’s reliance on Jarden’s trading price on December 4, 2015, 
constitutes legal error because it ignores the long-recognized principle in Delaware law, reinforced 
in Aruba, that stock price does not equal fair value.”). 
49 457 A.2d 701 (Del. 1983). 
21 
 
 
Although we refused to adopt a presumption in appraisal proceedings favoring deal 
price for fair value, we noted that “our refusal to craft a statutory presumption . . . 
does not in any way signal our ignorance to the economic reality that the sale value 
resulting from a robust market check will often be the most reliable evidence of fair 
value” and “second-guessing the value arrived upon by the collective views of many 
sophisticated parties with a real stake in the matter is hazardous.”50  Focusing on 
Weinberger and its end of the Delaware Block Method of valuation, we commented 
on the relevance of a stock’s unaffected market price to fair value: 
That Weinberger got rid of the Delaware Block Method does not 
mean that the pre-transaction trading price of a public company’s shares 
is not relevant to its fair value in appraisal, particularly given the focus 
on going concern value.  Historically, appraisal actions have had the 
most utility when private companies are being acquired or for public 
companies subject to a conflicted buyout, situations where market 
prices are either unavailable altogether or far less useful.  When, as 
here, the company had no conflicts related to the transaction, a deep 
base of public shareholders, and highly active trading, the price at 
which its shares trade is informative of fair value, as that value reflects 
the judgments of many stockholders about the company’s future 
prospects, based on public filings, industry information, and research 
conducted by equity analysts.51      
 
In Dell, we found that the Court of Chancery erred when it assigned no weight 
to market value or deal price as part of its valuation analysis.  Once again, our Court 
emphasized that the court must “take into account all relevant factors” and “give fair 
                                          
 
50 DFC, 172 A.3d at 366. 
51 Id. at 373 (footnotes omitted). 
22 
 
 
consideration to ‘proof of value by any techniques or methods which are generally 
considered acceptable in the financial community and otherwise admissible in 
court.’”52  Although we cautioned that, in a given case, the market is not always the 
best indicator of value, and it need not always be accorded some weight, we believed 
that, on the record before the court, “the market-based indicators of value—both 
Dell’s stock price and the deal price—have substantial probative value.”53 
And finally, in Aruba, we emphasized the “considerable weight” a court 
should give to the deal price “absent deficiencies in the deal process” because, for 
example, “a buyer in possession of material nonpublic information about the seller 
is in a strong position (and is uniquely incentivized) to properly value the seller when 
agreeing to buy the company at a particular deal price.”54  We also recognized, 
however, that “when a market was informationally efficient in the sense that ‘the 
market’s digestion and assessment of all publicly available information concerning 
[the Company] [is] quickly impounded into the Company’s stock price,’ the market 
price is likely to be more informative of fundamental value.”55  And how informative 
                                          
 
52 Dell, 177 A.3d at 21 (quoting Weinberger, 457 A.2d at 713). 
53 Id. at 35. 
54 Aruba, 210 A.3d at 137. 
55 Id. (quoting Dell, 177 A.3d at 7) (alterations in original); DFC, 172 A.3d at 349 (“Like any 
factor relevant to a company’s future performance, the market’s collective judgment of the effect 
of regulatory risk may turn out to be wrong, but established corporate finance theories suggest that 
the collective judgment of the many is more likely to be accurate than any individual’s guess.”); 
Dell, 177 A.3d at 35 (finding that the “market-based indicator” of “Dell’s stock price” had 
“substantial probative value”).     
23 
 
 
of fundamental value an informationally efficient market is depends, at least in part, 
on the extent of material nonpublic information.56  We also noted that it is a 
“traditional Delaware view” that in some cases “the price a stock trades at in an 
efficient market is an important indicator of its economic value” and “should be 
given weight.”57  
  In DFC, Dell, and Aruba we did not, as a matter of law, rule out any 
recognized financial measurement of fair value.  Instead, we remained true to the 
appraisal statute’s command that the court consider “all relevant factors” in its fair 
value determination.  Although subject to academic debate, we have also recognized 
the efficient capital markets hypothesis in appraisal cases.58  The Vice Chancellor 
got the “takeaway” exactly right from our recent appraisal decisions: “[w]hat is 
necessary in any particular [appraisal] case [] is for the Court of Chancery to explain 
                                          
 
56 Aruba, 210 A.3d at 138 n.53 (explaining that when markets reflect all information, rather than 
just publicly available information, they are “more likely to reflect fundamental value”); see 
Jonathan Macey & Joshua Mitts, Asking the Right Question: The Statutory Right of Appraisal and 
Efficient Markets, 74 Bus. Law. 1015, 1021 (2019) (“[B]ecause informational efficiency and 
fundamental efficiency are not the same thing, the share price of a company’s stock, even when 
informationally efficient, may diverge occasionally from the stock’s fundamentally efficient price.  
This divergence occurs, however, only when and to the extent that there is material nonpublic 
information that is not impounded in a company’s share prices.”). 
57 Aruba, 210 A.3d at 138. 
58 Compare, e.g., Macey & Mitts, supra note 57, at 1017 (“Delaware Courts are correct in affording 
primacy to the [efficient capital market hypothesis] in valuation cases.  In particular, . . . the ECMH 
is vastly superior to alternative, subjective valuation methodologies, such as [discounted cash 
flow] analysis.”), with Lynn A. Stout, The Mechanisms of Market Inefficiency: An Introduction to 
the New Finance, 28 J. Corp. L. 635 (2003) (exploring weaknesses of the efficient capital market 
hypothesis).   
24 
 
 
its [fair value calculus] in a manner that is grounded in the record before it.”59  Or, 
as we said in Dell: 
In the end, after this analysis of the relevant factors, “[i]n some 
cases, it may be that a single valuation metric is the most reliable 
evidence of fair value and that giving weight to another factor will do 
nothing but distort that best estimate.  In other cases, it may be 
necessary to consider two or more factors.”  Or, in still others, the court 
might apportion weight among a variety of methodologies.  But, 
whatever route it chooses, the trial court must justify its methodology 
(or methodologies) according to the facts of the case and relevant, 
accepted financial principles.60    
 
B. 
The Court of Chancery found, and the petitioners agree, that Jarden stock 
traded in a semi-strong efficient market, meaning the market quickly assimilated all 
publicly available information into Jarden’s stock price.61  The court considered 
whether there was sufficient information asymmetry between the market and 
insiders to render the unaffected market price unreliable.  Based on an event study 
by Dr. Hubbard and the market’s reaction to Jarden’s November Projections after 
their disclosure in its March proxy, the court found it unlikely that there was material 
nonpublic information not incorporated by the market’s estimate of Jarden’s value.  
                                          
 
59 Jarden, 2019 WL 3244085, at *2 (quoting DFC, 172 A.3d at 388) (alterations in original). 
60 Dell, 177 A.3d at 22 (quoting DFC, 172 A.3d at 387–88) (footnotes omitted). 
61 Aruba, 210 A.3d at 138 n.53. 
25 
 
 
Thus, the court found it reasonable to rely on Jarden’s unaffected market price for 
fair value.62   
On appeal, the petitioners challenge the absence of material nonpublic 
information, pointing to evidence in the record that, during the negotiations, the 
parties designated many documents confidential under a non-disclosure 
agreement.63  They also claim that Jarden was difficult to value due to what they 
claim was limited public information about the corporation coupled with its many 
acquisitions.  And they contend that Newell responded positively to a “significant 
amount of material, nonpublic information” during due diligence.64  Thus, according 
to the petitioners, the court should not have relied on Jarden’s unaffected market 
price when the market lacked material nonpublic information and reacted strongly 
when it eventually received that information.   
Experience tells us that sophisticated buyers and sellers typically exchange 
material confidential information in deal negotiations.  The buyer also usually has 
access to insiders, nonpublic projections, and the ability to ask questions and seek 
explanations.  Thus, the unaffected market price is not always a better reflection of 
                                          
 
62 The court also found there were no conglomerate or minority discounts, and the unaffected 
market price was not stale as of the merger date.  The petitioners do not challenge those findings. 
63 According to the petitioners, more than 143,000 documents were labelled “confidential” or 
“highly confidential,” meaning Jarden had “a good faith belief that the material contained non-
public, commercially sensitive information.”  Opening Br. at 27.  As they argue further, Newell 
was more incentivized to engage in price discovery than an ordinary trader because it was 
purchasing the entire company.  Id. at 27–28.     
64 Id. at 27. 
26 
 
 
fair value than the deal price negotiated by those with better access to the corporation 
and its advisors.   
But in this case, we are satisfied that, on the record before it, the court did not 
abuse its discretion when it found that the market did not lack material nonpublic 
information about Jarden’s financial prospects.  The only specific nonpublic 
information the petitioners point to are the November Projections, which were not 
public until the March 2016 joint proxy.65  The court assessed the materiality of the 
November Projections by comparing Jarden management’s projections and those 
from market analysts.66  The court relied on Dr. Hubbard’s opinion that characterized 
the difference in projections as a “divergence of opinion about Jarden’s prospects, 
not a material difference in available information.”67   
To test whether the difference of opinion represented a difference in available 
information, Dr. Hubbard conducted an event study.  Dr. Hubbard expected that if 
the November Projections contained information not previously reflected in the 
market price, Jarden’s and Newell’s stock price should react to the new information 
when it was disclosed in the March proxy.  “In other words, if the November 
                                          
 
65 Id. at 29.  In their reply brief, the petitioners mention briefly “Jarden’s February earning release 
reflecting better-than-expected performance for FY2015.”  Reply Br. at 3.  Because there is no 
further support for the argument and it was only raised in reply, we do not consider it.  
66 The court also considered the correlation between the federal risk-free rate and Jarden’s stock 
price and concluded that it did not support any information asymmetry.  Jarden, 2019 WL 
3244085, at *29. 
67 App. to Answering Br. at B563; Jarden, 2019 WL 3244085, at *30. 
27 
 
 
Projections justified more value[,] . . . then Newell’s stock price should have 
increased substantially [when Jarden disclosed the projections] to reflect that Newell 
was acquiring Jarden at less than fair value.”68   
 
As Dr. Hubbard testified and the court found, however, “that is not what 
happened.”69  Instead, Jarden’s stock price rose and Newell’s dropped.  The court 
accepted Dr. Hubbard’s conclusion that the difference between management’s and 
analysts’ projections “was not attributable to unreasonable market pessimism, but 
instead showed that market analysts had more accurately estimated Jarden’s 2016 
outlook than Jarden’s management (who may have been motivated by factors other 
than actual anticipated results when making their forecasts).”70  Based on the record 
before it, the court could find that the “market was well informed and the Unaffected 
Market Price reflects all material information.”71   
 
The petitioners take issue with the event study because the movement in stock 
prices could have been attributable to other factors.  As they argue, the proxy 
disclosed integration risks, stockholders associated those risks with Jarden, and 
parsing the effects of a single piece of information was impossible.  The petitioners 
also claim that Jarden’s stock price tracked Newell’s because Newell stock made up 
a substantial part of the merger consideration.  While the precise consequences of 
                                          
 
68 Jarden, 2019 WL 3244085, at *30. 
69 Id.; App. to Answering Br. at B564. 
70 Jarden, 2019 WL 3244085, at *30; App. to Answering Br. at B566. 
71 Jarden, 2019 WL 3244085, at *30. 
28 
 
 
these alleged facts are unclear, according to the petitioners the court abused its 
discretion by ignoring these facts.   
The court did not ignore these facts.  The court considered the arguments that 
“Jarden’s stock price was tethered to Newell” and that integration risks affected 
Jarden.72  The court found it “not supported by the credible evidence,” and while 
“Newell’s stockholders may have reacted to that [integration] risk, . . . there is no 
evidence that Jarden’s stockholders, or the market, associated that risk with 
Jarden.”73  In the end, the court did not abuse its discretion when it found Dr. 
Hubbard’s event study reliable even after considering the petitioners’ “tethering 
argument.”  
C. 
At the petitioners’ urging, the Court of Chancery did not rely on the deal price 
to find fair value because the negotiation process “left much to be desired.”74  
According to the court, Franklin “may well have set an artificial ceiling on what 
Newell was willing to pay,” and “flaws in the sale process” undermined the 
usefulness of the deal price as an indicator of fair value.75 
Having successfully undermined the reliability of the deal price in the Court 
of Chancery, the petitioners now claim on appeal that the deal price should have at 
                                          
 
72 Id. at *30 n.373. 
73 Id. (citing Dr. Hubbard’s testimony and reports).                           
74 Id. at *3. 
75 Id. at *24–25. 
29 
 
 
least acted as a floor for the fair value of Jarden stock.  As they argue, DFC, Dell, 
and Aruba require that the court give heavy weight to the deal price.  Because a 
better process would have resulted in a higher deal price, and, according to the 
petitioners, Jarden failed to prove synergies, they contend the deal price is “logically 
the minimum for any fair value determination.”76  
 
The petitioners’ arguments have some appeal.  It makes sense that if a deal 
negotiation process is flawed, and the seller’s negotiator capped the value under 
what might be achieved in true arm’s length negotiations, the deal price might act as 
a fair value floor in the absence of synergies.  But here, synergies cause us to find 
the Court of Chancery did not err for failing to treat the deal price as a floor for fair 
value.   
 
First, by way of background, the petitioners attacked the deal price as an 
unreliable indicator of fair value because of an imperfect negotiation process.  The 
Court of Chancery agreed with them.  In their post-trial briefing, the petitioners 
argued that “the issue of synergies only need be addressed if the deal ‘price was 
generated by a process that likely provided market value.’”77  Because “[t]hat 
                                          
 
76 Opening Br. at 44–47 (emphasis omitted) (listing other factual findings).   
77 App. to Opening Br. at A1039 (quoting Merion Capital LP v. BMC Software, Inc., 2015 WL 
6164771, at *17 (Del. Ch. Oct. 21, 2015)); see Merion Capital LP, 2015 WL 6164771, at *17 
(“[T]his Court must determine that the price was generated by a process that likely provided market 
value, and thus is a useful factor to consider in arriving at fair value.  Once the Court has made 
such a determination, the burden is on any party suggesting a deviation from that price . . . .”). 
30 
 
 
precondition has not been met here,” the petitioners implied that the court did not 
need to address the issue of synergies.78  In their post-Aruba briefing, they argued 
that the deal price should act as a floor, although they continued to argue that 
“[s]ynergies only become relevant in an appraisal if the deal price” was reliable.79  
We are hard-pressed to fault the court for not looking to the deal price as a floor for 
fair value when the petitioners told the court that synergies only became relevant if 
the deal price was reliable.  Further, that condition makes some sense—when the 
deal price is unreliable, the existence and allocation of synergies are likely more 
difficult to determine. 
 
Second, the Court of Chancery understood that the deal price had to be 
adjusted for synergies.  As we observed in Dell, “the court should exclude ‘any 
synergies or other value expected from the merger giving rise to the appraisal 
proceeding itself.’”80  The court here found that “[t]here is no dispute here that 
synergies were realized in the Merger.”81  Capturing the synergies was the “logic for 
                                          
 
78 App. to Opening Br. at A1039 (arguing that, in the case the court looks to the deal price, the 
sellers did not capture synergies in the deal price). 
79 Id. at A1334; see also In re Appraisal of AOL Inc., 2018 WL 1037450, at *10 n.119 (Del. Ch. 
Feb. 23, 2018) (“Because I do not explicitly give weight to the deal price, I need not address certain 
related issues, such as the calculation of synergies.”). 
80 177 A.3d at 21 (quoting Global GT LP v. Golden Telecom, Inc., 993 A.2d 497, 507 (Del. Ch. 
2010), aff’d, 11 A.3d 214 (Del. 2010)). 
81 Jarden, 2019 WL 3244085, at *25. 
31 
 
 
the deal” for Newell.82  And the court saw no reason to doubt the accuracy of the 
experts’ assumption of $500 million in expected synergies.  The court did find it 
“less clear” whether Jarden captured the synergies in the deal price.83  There was 
evidence going both ways.84  Additional evidence came from Dr. Hubbard, who 
found that Jarden captured the synergies.85  The court found that the competing 
evidence “stands in equipoise” and “the expert analysis of the transaction synergies 
raised more questions than it answered.”86  In the end, however, the court concluded 
that “Jarden stockholders probably did [] receive the value of the synergies that were 
created by the deal.”87  And it was “satisfied from the evidence that the Merger Price 
exceeded fair value.”88   
 
The record supports the court’s conclusion that there were synergies in the 
deal, and Jarden “probably” captured those synergies in the merger price.  As further 
evidence of the court’s belief that Jarden captured some of those synergies, the court 
                                          
 
82 Id.; App. to Opening Br. at A553 (Polk testified that “[w]e wanted as part of—the deal terms, to 
get control of the company.  Because there was no way that, without our leadership of the change 
agenda, those synergies were going to be realized.”). 
83 Jarden, 2019 WL 3244085, at *25. 
84 See, e.g., App. to Opening Br. at A549 (Polk testified that “there’s no way you’d pay a premium 
for anything unless you had the synergies.  So of course that was part of the equation.”); id. at 
A2777 (Polk wrote that “if we get the deal done between $60 and $65, we are basically getting the 
synergies with no value ascribed to them.”). 
85 Dr. Hubbard’s analysis valued the synergies at $17.43 per Jarden share, which the court noted 
“line[d] up nicely with the delta between the unaffected market price ($48.31) and the Merger 
Price ($59.21), indicating that the delta, or premium, represented expected synergies.”  Jarden, 
2019 WL 3244085, at *26; App. to Opening Br. at A5757; App. to Answering Br. at B678. 
86 Jarden, 2019 WL 3244085, at *26. 
87 Id. 
88 Id. at *26 n.324. 
32 
 
 
assigned a specific number to deal price less synergies.  While the basis for the 
number is a bit uncertain, it falls between two values Dr. Hubbard identified.89  
Regardless, in the end, the court did not give deal price minus synergies any weight 
in its final fair value award.90 
D.  
 
The Court of Chancery also looked to other market evidence to support its 
conclusion that Jarden’s unaffected market price represented fair value.  According 
to the petitioners, the other market evidence either did not support the court’s 
analysis, or it pointed in the other direction and the court ignored it.  After reviewing 
the record, however, which contains a mix of valuation ranges supporting either 
side’s valuation position, we find that the court did not abuse its discretion in its 
review of the conflicting valuations.   
 
First, the petitioners point to market analysts, who they claim had price targets 
of $58-$65 per share.91  The court noted that “[m]ore than twenty professional 
financial analysts followed Jarden” and found “the lack of consensus between Jarden 
management and third-party analysts’ projections” not “evidence of information 
                                          
 
89 Id. at *50 (assigning $46.21 as “the most reliable estimate of fair value” under the deal price less 
synergies approach); App. to Opening Br. at A691 (testifying that $41.78 and $47.21 are possible 
values).  Perhaps the court’s number, $46.21, is simply a mistyped $47.21.   
90 Jarden, 2019 WL 3244085, at *50 (awarding only the unaffected market price of $48.31). 
91 Opening Br. at 31 (citing App. to Opening Br. at A3332 (summarizing analyst reports with price 
targets ranging from $53–$65)). 
33 
 
 
asymmetry” because of Dr. Hubbard’s event study.92  While not entirely clear 
whether the court was referring to the higher price targets, they appear to be another 
example of a difference in opinion about Jarden’s prospects rather than evidence of 
a difference in raw information.93     
 
The petitioners also rely on valuations from financial advisors.94  As for 
Centerview and Goldman, the unaffected market price fell within their valuation 
ranges.95  The petitioners cherry-pick the highest value in those ranges without 
justifying why that is the only relevant value.96  And the petitioners point to 
Barclays’s materials valuing Jarden at $60-$68 per share.97  But as Jarden observes, 
Barclays developed those materials after “Franklin . . . instructed [his personal 
Barclays banker] to start developing an analysis supporting a transaction in the range 
of $60-$69 per share.”98   
                                          
 
92 Jarden, 2019 WL 3244085, at *5, *30; see App. to Answering Br. at B563–66.   
93 Jarden, 2019 WL 3244085, at *30. 
94 Opening Br. at 33 (citing Barclay’s valuation at $60-$68 per share, Centerview’s valuation up 
to $66.64 per share, and Goldman’s valuation up to $68.12 per share).       
95 App. to Opening Br. at A3391 (Centerview presenting a range of $39-67 per share); id. at A3347 
(Goldman presenting a range of $34.10-$68.12 per share). 
96 Reply Br. at 9 n.46 (“[T]he full range of the financial advisors’ DCF values does not negate the 
fact that each contemplated Jarden’s value well above the Deal Price.”). 
97 App. to Opening Br. at A1988, A2063 (Barclays’ presenting a range of $60-$68 per share). 
98 Jarden, 2019 WL 3244085, at *10 (citing the same presentation as the petitioners cite on appeal).  
The petitioners do not refute that on reply.  Reply Br. at 9 n.46 (“Respondent’s argument that 
Barclay’s materials reflecting a range between $60-$68 did not constitute a valuation also 
necessarily admits that Jarden’s financial advisors simply bracketed the deal terms as demanded 
by Franklin.”).  
34 
 
 
Next, the petitioners rely on valuations from those involved in the 
negotiations—the parties who negotiated a higher price and management who 
received additional payments.  For the negotiators, the petitioners argue that 
Newell’s opening bid of $57 per share, and Jarden’s rejection of that bid, indicate 
the parties thought Jarden’s value was higher than the unaffected market price.  But 
a deal price may be higher than the unaffected market price for reasons other than 
the seller’s going concern value, and Polk testified that Newell paid a premium for 
control and anticipated synergies.99  For the compensation received by executives, 
the petitioners argue that they received “$71.04, $76.11, and $81.69 per share.”100  
The record supports the court’s view that the increased management compensation 
could be attributed to amended employment agreements, extended non-compete 
agreements, and an acceleration of certain restricted stock awards, which do not 
affect management’s valuation of Jarden.101    
                                          
 
99 App. to Opening Br. at A549 (“[T]here’s no way you’d pay a premium for anything unless you 
had the synergies.”); id. at A552 (“The deal value assumed $500 million of synergies.”); id. at 
A553 (“[O]ne of the deal requirements, from our perspective, was that we have management 
control.  And the logic for why that was so important was because in order to get the synergies, 
we needed to have management control, because we didn’t believe, if they had management 
control, they would pursue it.”); see DFC, 172 A.3d at 371 (“[I]t is widely assumed that the sales 
price in many M & A deals includes a portion of the buyer’s expected synergy gains, which is part 
of the premium the winning buyer must pay to prevail and obtain control.”).  
100 Opening Br. at 34. 
101 Jarden, 2019 WL 3244085, at *19 n.249; App. to Opening Br. at A5017–18 (Dr. Zmijewski’s 
report finding that the $71-$81 per share received by management is the total amount received, 
including compensation unrelated to stock ownership, divided by the number of shares held). 
35 
 
 
Finally, the court supported its fair value award by pointing to Jarden’s 
financing for the Jostens acquisition through a $49 per share equity offering, as well 
as a stock buyback capped at $49 per share following the market’s negative reaction 
to the Jostens acquisition.  The court concluded that Jarden, at the time, believed that 
the price cap “reflected Jarden’s value.”102  And while the court concluded that the 
buyback effort was “by no means dispositive,” it did consider the buyback 
“persuasive evidence that, . . . both [Jarden] and the market saw Jarden’s value well 
below what [the petitioners] seek here.”103   
The petitioners challenge the court’s reliance on the buyback as a fair value 
indicator, claiming that the court’s reliance on the price cap was “factually incorrect” 
and ignored the opinion of others who thought Jarden was undervalued.104  They 
argue the court’s use of the buyback to corroborate the unaffected market price “does 
not make any sense.”105  To the petitioners, the buyback indicates that Jarden’s stock 
was undervalued because the “rationale behind a stock repurchase is the Company’s 
belief that its stock is undervalued.”106   
According to the record, Jarden was coming off a weaker than expected equity 
raise at $49 per share.  And when the market reacted poorly to the Jostens 
                                          
 
102 Jarden, 2019 WL 3244085, at *31. 
103 Id. 
104 Opening Br. at 31. 
105 Id. at 34. 
106 Id. at 35 (emphasis omitted). 
36 
 
 
acquisition, Jarden sought to signal confidence to the market by repurchasing 
shares.107  Jarden authorized a buyback with a price cap of $49 because it believed 
that price reflected Jarden’s value and because of the recent equity raise.108  Jarden 
repurchased shares on two days at an average price of $45.96 per share on the first 
and $48.05 per share on the second.109  There are additional reasons for buybacks, 
like signaling confidence, beyond the petitioners’ assertion that the only rationale 
for buyback is a belief that the stock is undervalued.  Further, even if it was indicative 
of such a belief, a price cap of $49 per share could also indicate where that belief 
ends and the board believes the company is valued more accurately.110  
E.  
  
Finally, the petitioners contend that, after reargument, the Court of Chancery 
should not have changed the terminal investment rate (“TIR”) in its DCF model.  
The change is meaningful because, as petitioners claim, after the court corrected 
other inputs to the model, the TIR change reduced the final DCF value from $61.59-
                                          
 
107 See App. to Opening Br. at A4250 (Franklin stated that there were “dual reason[s]” for buying 
back shares, in part because it was undervalued in the mid-$40s, and in part because “after the 
announcement of the Jostens transaction, we wanted to show the market that we on the 
management front and the company’s front thought the reaction from the market was wrong.”). 
108 App. to Opening Br. at A448 (Franklin testified that “we were buyers up to 49 [dollars per 
share], which we considered full value at the time.”); id. (Franklin testified “[w]hy buy higher than 
you’d just done a stock offering at 49 a few weeks prior?  It made no sense.”). 
109 Jarden, 2019 WL 3244085, at *31; App. to Answering Br. at B252. 
110 See App. to Opening Br. at A4249–50 (Franklin explained that when the board decided to 
repurchase shares, in part because they thought the market undervalued it, the price was “44, 45; 
something like that.  And I can’t remember why, but they moved up as we went into the buyback 
program. . . . We got a little unlucky in that regard. . . . So ideally we would have liked to still 
bought them at 44, 45.”). 
37 
 
 
$64.01 per share to $48.23 per share—a number that lines up with Jarden’s 
unaffected market price.   
 
To review the sequence of events, the parties’ experts prepared DCF analyses 
to estimate Jarden’s value.  Although both experts agreed on some model inputs, not 
surprisingly they differed on how Jarden would perform in the terminal period, 
where over 80% of value resided.111  As Dr. Hubbard described, estimating the value 
of the terminal period requires “a sense of what terminal period free cash flows are, 
the investments needed to sustain the free cash flow, the growth of the firm, and, of 
course, its cost of capital.”112  The TIR is the amount of investment at the terminal 
period required to support the projected growth during the terminal period.113   
 
At trial, Dr. Zmijewski’s approach aligned, in concept, with the Bradley-
Jarrell Plowback Formula to calculate a 4.9% TIR.114  That model posits that the rate 
of investment must be measured by what is required to drive real growth, meaning 
growth over inflation.  As Jarden’s growth steadied out and slowed over time, the 
theory goes, Jarden required less capital expenditure to drive real growth because a 
greater percentage of its overall growth is driven by inflation and other economic 
                                          
 
111 Jarden, 2019 WL 3244085, at *37 n.430. 
112 App. to Opening Br. at A678.  
113 Id. at A679; see In re Appraisal of PetSmart, 2017 WL 2303599, at *25 (Del. Ch. May 26, 
2017) (“[The expert] used a model out of a McKinsey & Co. textbook to calculate the amount of 
investment necessary at the terminal period to support the projected growth during the terminal 
period.”). 
114 As the court noted, Dr. Zmijewski only advocated implicitly for a 4.9% TIR. 
38 
 
 
factors.115  According to Dr. Zmijewski, Jarden, as a steady-state corporation, should 
expect lower growth in the terminal period and thus a much lower TIR.116   
Dr. Hubbard calculated a 33.9% TIR based on a formula attributed to 
McKinsey & Co.  The Court of Chancery has accepted the McKinsey formula in 
other cases, sometimes referring to it as a convergence theory.117  The McKinsey 
formula derives the TIR by dividing the terminal growth rate by the return on new 
invested capital (“RONIC”).  It posits that a company’s RONIC converges towards 
its weighted average cost of capital (“WACC”) over time because corporations in 
competitive industries will not continue to have high and rising returns on invested 
capital (“ROIC”).118  To put his calculated rate in context, Dr. Hubbard identified 
Jarden’s average historic investment rate over the previous six years as 26.9%.119   
Dr. Hubbard testified that he used the McKinsey formula because it is the 
superior of “multiple approaches one can use for estimating the terminal investment 
                                          
 
115 Jarden, 2019 WL 3244085, at *40. 
116 Id. 
117 See PetSmart, 2017 WL 2303599, at *39 (“[The expert’s] formula demonstrates that PetSmart’s 
return on invested capital will converge toward its cost of capital, a theory this court has repeatedly 
cited with approval.”); John Q. Hammons Hotels, 2011 WL 227634, at *4 n.16 (“The Convergence 
Model is a reflection of the widely-accepted assumption that for companies in highly competitive 
industries with no competitive advantages, value-creating investment opportunities will be 
exhausted over a discrete forecast period, and beyond that point, any additional growth will be 
value-neutral.  As a result, return on new investment in perpetuity will converge to the company’s 
cost of capital.”) (citations omitted). 
118 Jarden, 2019 WL 3244085, at *40, *40 n.478; App. to Opening Br. at A682, A5724–25. 
119 App. to Answering Br. at B543–46.  Dr. Hubbard testified that he included the graph of 
historical rates in his rebuttal report “to respond to something Professor Zmijewski raised,” and it 
“had nothing to do with [his] model” because “the past doesn’t matter.”  App. to Opening Br. at 
A713. 
39 
 
 
rate.”120  He also relied on it because “it matches the economic precepts . . . of being 
more rigorous about quantifying the link between growth and investment, that 
growth is not free, and linked to the return on capital.”121   
Dr. Zmijewski criticized Dr. Hubbard for assuming that new investments as 
of 2021 would not create any value, for excluding certain expenditures from 
investments, for using an accounting definition for net investment, and for using 
accounting rates of return rather than economic rates of return to calculate WACC.122  
Dr. Hubbard responded that he did account for certain kinds of investment.123  And 
when pressed on whether the McKinsey formula undervalued Jarden, Dr. Hubbard 
acknowledged that it can undervalue some businesses, but rejected that it did so with 
Jarden.124 
The court rejected Dr. Zmijewski’s TIR as too low because “it unreasonably 
assumes rising ROIC for more than 40 years into the Terminal Period, unreasonably 
assumes all new investment in the Terminal Period will be comprised entirely of 
                                          
 
120 App. to Opening Br. at A679–80 (testifying that the formula is applicable, “generally accepted 
in the fields of finance and economics,” and supported by additional treatises). 
121 Id. at A679.  
122 Id. at A368–69. 
123 Id. at A682. 
124 Id. at A717 (testifying that the McKinsey formula undervalues “some businesses,” and while 
Jarden is “a consumer products company,” it is “not Coke or Pepsi, whose rates of return are far 
below what [the petitioners’] expert estimates”); id. at A731 (“The Coke is obviously an iconic 
company with brands.  It is not a company that you can earn a competitive return, which is why 
McKinsey selected it. . . .  So this is the kind of company that [the petitioner’s counsel] was 
highlighting as exceptional.  It is exceptional, but it’s not so profitable as the company that 
Professor Zmijewski modeled for your benefit.”). 
40 
 
 
working capital, and is based on a methodology that conflicts with the valuation goal 
of striking a balance between investment and growth.”125  Instead, the court found 
Dr. Hubbard’s use of the McKinsey formula credible and supported by valuation 
treatises, but also noted that Dr. Hubbard’s “relatively high TIR” and his use of six 
years of Jarden’s historic investment rates, instead of five years like that used for the 
terminal growth rate, raised “yellow flags” because the sixth year was an outlier—
Jarden’s five-year average historic investment rate was only 21.6%.126  The court 
decided to split the difference between Dr. Hubbard’s TIR of 33.9% and the five-
year historic rate of 21.6%, landing at 27.75%.  According to the court, its final TIR 
reflected Jarden’s historical investment rate but accounted for a slight increase to 
accommodate sustained growth in the terminal period.127 
 
On reargument, the petitioners pointed out errors in the court’s DCF inputs.  
In response, Jarden argued that the court’s TIR selection, which implied a RONIC 
higher than Jarden’s WACC, contradicted the court’s acceptance of the McKinsey 
formula, which derives a TIR by setting RONIC equal to the WACC.128  The court 
                                          
 
125 Jarden, 2019 WL 3244085, at *41. 
126 Id. 
127 Id. 
128 App. to Answering Br. at B91 (Dr. Hubbard, in an affidavit attached to Jarden’s reargument 
response, stated that the court’s “27.75 percent terminal investment rate and its 3.1 percent terminal 
growth rate imply a RONIC of 11.2 percent.  On the one hand, with a 6.9 percent cost of capital, 
this RONIC is 4.2 percent above the cost of capital.  On the other hand, the Opinion cited my 
testimony that ‘in competitive industries, the return on new invested capital should equal the 
company’s WACC’ as credible and supported by the valuation treatises.  These two views are in 
tension.”) (footnotes omitted). 
41 
 
 
adopted all of the petitioners’ corrections to its DCF inputs, and also adopted 
Jarden’s TIR correction by revising the RONIC to equal the WACC, which had the 
effect of changing its 27.75% TIR to 42.5%.  According to the court, its original TIR 
analysis did not make sense because it departed from the McKinsey formula and 
ignored its premise that the RONIC equals the company’s WACC.  After all the 
adjustments, the revised DCF value was $48.23 per share. 
 
On appeal, other than impugning the court’s motives for making the TIR 
change, the petitioners raise a substantive issue—whether the court erred by 
adopting the McKinsey formula and then failed to justify changing the value on 
reargument.129  According to the petitioners, the court should not have adopted the 
entire McKinsey formula because it undervalues some businesses—for example, 
some with high brand strength, high barriers to entry, and limited competition.130  
                                          
 
129 Notably, the petitioners do not argue for their expert’s terminal investment rate.  Instead, they 
“assert that the 27.75% TIR in the Opinion was reasonable in light of its factual findings and 
credibility determinations regarding Hubbard.  Further, the delta can be explained by [Jarden’s] 
failure to capitalize investment that is expensed immediately and by ignoring the expectations of 
everyone involved with the deal that Jarden would continue to make a profit on new investment in 
the future.”  Reply Br. at 14 n.63. 
130 The supporting section of McKinsey’s book states in full: 
Many financial analysts routinely assume that the incremental return on capital 
during the continuing-value [i.e. terminal] period will equal the cost of capital.  This 
practice relieves them of having to forecast a growth rate, since growth in this case 
neither adds nor destroys value.  For some businesses, this assumption is too 
conservative.  For example, both Coca-Cola’s and PepsiCo’s soft-drink businesses 
earn high returns on invested capital, and their returns are unlikely to fall 
substantially as they continue to grow, due to the strength of their brands, high 
barriers to entry, and limited competition.  For these businesses, an assumption that 
RONIC equals WACC would understate their values.  This problem applies equally 
to almost any business selling a product or service that is unlikely to be duplicated, 
42 
 
 
And because the court found that Jarden was unique and had high barriers to entry, 
the petitioners argue that it fits within the class of businesses that the McKinsey 
formula might undervalue.131  Further, they argue that the court failed to explain why 
its terminal investment rate was higher than historical rates “just to sustain inflation-
driven growth.”132 
 
First, we note that the Court of Chancery did not rely on its DCF model to 
find fair value, other than to use the corrected model to corroborate the unaffected 
market price.  Second, the wide swing in value attributed to one input in the DCF 
model supports the reason the court did not rely on it—a lack of confidence that the 
experts were providing reliable economic advice on the inputs driving the DCF 
model.  And finally, as best we can tell, the petitioners’ argument that the McKinsey 
formula undervalued Jarden because it was in a certain class of companies lacks 
support from the experts.133  Dr. Hubbard testified to the contrary, and Dr. Zmijewski 
                                          
 
including many pharmaceutical companies, numerous consumer products 
companies, and some software companies.   
 
However, even if RONIC remains high, growth will drop as the market 
matures.  Therefore, any assumption that RONIC is greater than WACC should be 
coupled with an economically reasonable growth rate. 
App. to Opening Br. at A1495 (Tim Koller et al., McKinsey & Co., Valuation: Measuring and 
Managing the Value of Companies 260 (Wiley, 6th ed. 2015)) (internal footnote omitted). 
131 See Jarden, 2019 WL 3244085, at *6 (describing Jarden as “concentrated on acquiring top 
brands in niche markets,” which “developed secure trenches that presented barriers to others who 
might look to compete with Jarden’s niche product lines”).   
132 Opening Br. at 40.   
133 See id. at 39–42 (citing no expert support); App. to Answering Br. at B551 (Dr. Hubbard, in his 
rebuttal report, stated that “the Zmijewski Report provides no evidence to support his embedded 
43 
 
 
criticized the court’s use of the formula for other reasons.134  Further, while the 
petitioners cite McKinsey’s concerns about undervaluing certain companies, they do 
not provide support for re-adopting the court’s original solution to split the 
difference.135   
 
As for whether the court’s explanation was adequate, the court originally 
found Dr. Hubbard’s testimony credible and the McKinsey formula appropriate, yet 
deviated from its application by splitting the difference between Dr. Hubbard’s 
proposed value and the recent historical average and implying a RONIC higher than 
Jarden’s WACC.136  On reargument, the court stated that it had “improperly 
depart[ed]” from the McKinsey formula and “no longer [saw] a basis to account or 
adjust for the unjustified sixth year of comparable growth.”137  The court also noted 
                                          
 
assumption that Jarden had a sustainable competitive advantage allowing it to generate returns far 
in excess of its cost of capital indefinitely.”). 
134 The petitioners re-raise several of Dr. Zmijewski’s criticisms on reply.  They argue the court’s 
application of the McKinsey formula assumed improperly that Jarden will need to invest capital 
to grow at the rate of inflation, Jarden’s industry will no longer be able to profit on new investment 
after 2021, and the court misapplied the McKinsey formula by “ignoring other types of investments 
that must be included when calculating required investment and RONIC.”  Reply Br. at 14–17 
(emphasis omitted).  The court considered and rejected these arguments, and the petitioners fail to 
show that doing so was an abuse of discretion. 
135 Jarden, 2019 WL 4464636, at *3 n.11 (“Respondent makes a valid point that the Court did not 
cite to finance literature or the record in reaching its ‘blended TIR.’”); see App. to Opening Br. at 
A712 (Dr. Hubbard testified that “past data on investment don’t inform my model [for terminal 
investment rate] at all.”); App. to Answering Br. at B91 (“While historical investment rates can be 
used as a reference point, both financial theory and application of the investment rate formula 
g/RONIC focuses on the future.”). 
136Jarden, 2019 WL 3244085 at *41 (“Dr. Hubbard’s testimony that, in competitive industries, the 
return on new invested capital should equal the company’s WACC was credible, and it is supported 
by the valuation treatises.”).   
137 Jarden, 2019 WL 4464636, at *3. 
44 
 
 
that it “did not cite to finance literature or the record in reaching its ‘blended 
TIR.’”138  Based on the record before the court, the court did not abuse its discretion 
by applying the McKinsey formula in its post-trial opinion or correcting what it 
believed was an erroneous application of the formula on reargument. 
III. 
We affirm the Court of Chancery’s judgment. 
                                          
 
138 Id. at *3 n.11; see App. to Answering Br. at B91 (“The Court obtained this rate [of 27.75 
percent] based on averaging my 33.9 percent terminal investment rate and the 21.6 percent 
historical five-year average.  I am not aware of support for such an approach.”) (footnote omitted).