IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

IN RE APPRAISAL OF PANERA

BREAD COMPANY

)

)

)

 C.A. No. 2017-0593-MTZ

MEMORANDUM OPINION

Date Submitted: October 7, 2019

Date Decided: January 31, 2020

Samuel T. Hirzel, II, Elizabeth A. DeFelice, and Melissa N. Donimirski, 

HEYMAN ENERIO GATTUSO & HIRZEL LLP, Wilmington, Delaware; 

Steven M. Hecht, Michael T.G. Long, Jarett N. Sena, Natalie F. Dallavalle, Frank 

T.M. Catalina, Edoardo Murillo, and Jonathan M. Kass, LOWENSTEIN 

SANDLER LLP, New York, New York; Attorneys for Petitioners.

Paul J. Lockwood, Jennifer C. Voss, Jenness E. Parker, Alyssa S. O’Connell, 

Kaitlin E. Maloney, Daniel S. Atlas, Bonnie W. David, and Andrew D. Kinsey, 

SKADDEN ARPS SLATE MEAGHER & FLOM LLP, Wilmington, Delaware; 

Attorneys for Respondent.

Zurn, Vice Chancellor.
1

In this appraisal action, I must determine the fair value of each share of the 

subject company on the closing date of its acquisition. I find that the process by 

which the company was sold bore several objective indicia of reliability, which were 

not undermined by flaws in that process. I therefore find that the deal price is 

persuasive evidence of fair value, and give no weight to other valuation metrics. I 

deduct some synergies, but find others were not adequately proven. I undergo that 

synergies analysis solely to fulfill my statutory mandate, rather than to effectuate 

any transfer of funds between the parties, because the company prepaid the entire 

deal price and has no recourse for a refund under the appraisal statute. 

I. BACKGROUND1

This appraisal action generated an extensive record. During six days of trial, 

the parties introduced 1,336 exhibits and lodged seventeen depositions in evidence.2 

 

1 Citations in the form “PTO ¶ ––” refer to stipulated facts in the pre-trial order. See Docket 

Item (“D.I.”) 108. Citations in the form “[Name] Tr.” refer to witness testimony from the 

trial transcript. Citations in the form “[Name] Dep.” refer to witness testimony from a 

deposition transcript. Citations in the form “JX –– at ––” refer to a trial exhibit. 

2 See D.I. 103, Ex. 1. The subset of exhibits the parties relied on is set forth on the schedule 

of evidence. See D.I. 148, Ex. A; D.I. 151. 
2

Five experts and six fact witnesses testified live. These are the Court’s findings 

based on a preponderance of the evidence. 

Respondent Panera Bread Company (“Panera” or the “Company”) is a 

national bakery-cafe concept in the United States and Canada.3 Panera is a 

corporation organized and existing under the laws of Delaware, with headquarters 

in St. Louis, Missouri.4 Until July 18, 2017, Panera’s stock was listed on the 

NASDAQ stock exchange under the symbol “PNRA.”5 

On that date, JAB Holdings B.V. purchased Panera for $315.00 per share.6 

That entity is a private limited liability company incorporated under the laws of the 

Netherlands that indirectly has a controlling interest in JAB Holding Company, 

LLC.7 JAB Holding Company, LLC is a private limited liability company 

incorporated under the laws of Delaware and headquartered in Washington D.C. that 

indirectly has held a controlling interest in Panera since the acquisition.

8

 JAB 

Holding Company S.à.r.l. has an ultimate controlling interest in JAB Holdings B.V., 

 

3 PTO ¶¶ 48, 89. 

4

Id. ¶ 48.

5

Id. ¶ 49. 

6

Id. ¶ 1. 

7

Id. ¶¶ 66–67.

8

Id. ¶ 65.
3

JAB Holding Company, LLC and Panera.9 I refer to all of these entities collectively 

as “JAB.”

In the wake of JAB’s acquisition, certain dissenting Panera stockholders 

(“Petitioners” or “Dissenting Stockholders”) are entitled to an appraisal of the fair 

value of their Company shares in accordance with their demands.10 Petitioners hold 

785,108 shares of Panera’s common stock.11 Petitioners include Short Hills Capital 

Partners, holding 35,800 shares of Panera common stock;12 Weiss Asset 

Management, including 2017 Arlington, LLC, holding 154,669 shares of Panera 

common stock;13 Canyon International LLC, holding 31,794 shares of Panera 

common stock;14 and Yellowstone Global LLC, holding 47,692 shares of Panera 

common stock.15 Each of the Petitioners demanded appraisal before the vote on the 

merger, held the appraisal shares through the merger date, and maintained their 

appraisal demand. 

 

9

Id. ¶ 68.

10 Id. ¶ 20. 

11 Id. ¶ 22. 

12 Id. ¶ 26. 

13 Id. ¶ 32. 

14 Id. ¶ 37. 

15 Id. ¶ 42.
4

Relevant non-parties include Panera board members Domenic Colasacco, 

Fred K. Foulkes, Larry J. Franklin, Diane Hessan, Thomas E. Lynch, William W. 

Moreton, Ronald M. Shaich, Mark Stoever, and James D. White.16

Shaich founded Panera in 1981.

17

 He served on the board from 1981 to 

December 2018 in various capacities, including Chairman, Co-Chairman, Executive 

Chairman, and Non-Executive Chairman.18 Shaich served as Chief Executive 

Officer from 1984 to May 2010, when he stepped back from the Company to 

co-found an organization called “No Labels,” which he hoped would reduce 

partisanship in American politics.19 During this time, Shaich remained Panera’s

largest stockholder and Executive Chairman, and Moreton served as CEO.

20

 In 

2012, Moreton had a family issue and asked Shaich to return to a greater leadership 

position.21 Shaich agreed and served as Co-Chief Executive Officer, along with 

Moreton, from March 2012 to August 2013.22 At that time, Moreton stepped down 

as Co-Chief Executive Officer, and Shaich resumed his role as sole Chief Executive 

 

16 Id. ¶ 50. These directors served from January 2016 until the merger closed. 

17 Id. ¶ 51.

18 Id.

19 Id.; Shaich Tr. 936:2–937:10. 

20 Shaich Tr. 937:11–938:1. 

21 Id. 940:12–21; accord PTO ¶ 51. 

22 PTO ¶ 51.
5

Officer until January 1, 2018.23 The market and the restaurant industry both 

recognize Shaich as a visionary.24

Moreton joined Panera’s board in May 2010, after serving as Executive Vice 

President and Chief Financial Officer from October 1998 to March 2003 and 

Executive Vice President and Co-Chief Operating Officer from November 2008 to 

May 2010.25 Moreton also served as President and Co-Chief Executive Officer from 

March 2012 to August 2013, Chief Financial Officer (Interim) from August 6, 2014 

to April 15, 2015, and Executive Vice Chairman from August 2013 to July 18, 

2017.26 

Colasacco, the lead independent director, served as an outside director along 

with directors Hessan, Foulkes, Franklin, Lynch, Stoever, and White.27 

Panera’s relevant management includes Blaine Hurst, who began serving as 

Panera’s Chief Executive Officer after Shaich left that post in January 2018.28 Prior 

to that time, Hurst served as Executive Vice President and Chief Transformation and 

 

23 Id.; see also JX0005. 

24 PTO ¶ 98.

25 Id. ¶ 52. 

26 Id.

27 See id. ¶¶ 53–59. 

28 Id. ¶ 60.
6

Growth Officer from December 2010 to December 2016.29 Then, Hurst served as

Panera’s President from December 2016 to January 2018.30 

Michael Bufano has served as Panera’s Chief Financial Officer, since April 

2015.31 Bufano also served as the Vice President of Planning from July 2010 to 

August 2014.32 

Andrew Madsen was Panera’s President from May 2015 to December 9, 2016,

when he left the Company.33

A. Shaich Founds Panera And Leads It Through Unmatched Growth.

In 1980, Shaich founded a single 400-square-foot cookie store.34 That store 

would eventually become Panera. In 1982, Shaich merged the cookie store with a 

small regional bakery called Au Bon Pain.35 That entity purchased the Saint Louis 

Bread Company in 1987.36 Shaich took this company public in 1991,37 rebranded 

the Saint Louis Bread Company as Panera in 1997, and divested the Au Bon Pain 

 

29 Id.

30 Id.

31 Id. ¶ 61.

32 Id.

33 Id. ¶ 62. 

34 Id. ¶ 86; Shaich Tr. 924:4–17. 

35 PTO ¶ 86. 

36 Id.

37 Id.; Shaich Tr. 926:20–927:3. 
7

division in 1999.38 After the divestiture, Shaich changed the company’s name to 

Panera Bread Company.39 After divesting Au Bon Pain, Panera stock traded at $6.00

per share.40 

Panera pioneered a new restaurant segment called “fast casual,” which found 

a niche between “quick service restaurants like McDonald’s and Wendy’s and 

restaurants like that and casual dining, full sit-down service.”41 From 2000 to 2010, 

Panera expanded rapidly into a national restaurant chain.42 Panera operated in three 

segments: company bakery-cafe operations, franchise operations, and fresh dough 

and other product operations.43 By 2004, Panera’s stock was trading around $30.00

per share, and by 2010, it was trading around $70.00 per share.44 

Despite the Company’s growth, by 2010 or 2011, Shaich felt “great distress” 

because Panera’s same store sales were weakening and market share gains slowed.45 

 

38 PTO ¶ 86.

39 Id.

40 JX0400 at 17. 

41 Moreton Tr. 710:23–711:12. 

42 Moreton Tr. 714:5–20, 732:11–24. From 2007–2009, Panera also expanded by acquiring 

Paradise Bakery & Café, a Phoenix, Arizona-based concept with over 70 locations in 10 

states. PTO ¶¶ 87–88. 

43 PTO ¶ 92. 

44 See JX0400 at 18. 

45 Shaich Tr. 938:2–16. 
8

Increasingly, Panera faced competitive pressures and needed to differentiate for 

future growth.46 In response to these pressures, Shaich spent his time as Executive 

Chairman focusing almost exclusively “on a range of strategic and innovation efforts 

for Panera.”47 During this time, Shaich wrote “the Amazon memo” on how he would 

compete with Panera if he were not part of the Company.48 His vision focused on 

changing the guest experience, creating a new ordering system, and providing a 

delivery service.49 After discussing these initiatives with Moreton, Shaich led the 

effort to prototype these ideas during the 2010–2012 period before re-assuming a

management post as co-CEO in 2012.50 

In 2013, Panera signaled to the market that it was “deploying significant 

transaction-driving initiatives.”51 By early 2014, Fortune magazine featured 

Panera’s “big bet on tech,” detailing how Shaich’s early prototypes had developed 

into new company initiatives.52 After launching that technology in fourteen cafes, 

 

46 Id. 938:2–939:22. 

47 PTO ¶ 102.

48 Shaich Tr. 938:7–939:8. 

49 Id. 938:7–939:10. 

50 Id. 938:7–939:16; see also PTO ¶ 51; Moreton Tr. 742:23–743:8. 

51 JX0006 at 1. 

52 See JX0007 (examining Panera 2.0 and the associated costs of the investments); see also 

JX0008 (CheatSheet article detailing the purchase of a “to-go bread bowl via smart 

phone”). 
9

the Company formally announced the Panera 2.0 initiative in April 2014.53 Panera 

2.0 offered “a series of integrated technologies to enhance the guest experience”54

through “new mechanisms for ordering, payment, food production, and, ultimately, 

consumption.”55 Panera 2.0 enhanced ordering through Rapid Pick-Up, fast lane 

kiosks, and online/mobile ordering.

56

 Panera also committed to “operational 

excellence” with new production equipment and systems to increase capacity and 

accuracy.57 Along with these changes, Panera focused on “activat[ing] innovation 

in store design.”58 To adopt these initiatives, Hurst “create[d] a ‘digital flywheel’ 

whereby all systems and consumer touchpoints—point of sale (PoS), back of house, 

integrated customer data, big customer data, one-to-one marketing—are 

interconnected for operational gain.”59 

These initiatives rolled out in stages. In 2014, the Company kicked off Panera 

2.0 with Rapid Pick-Up, an advanced ordering system.60 Over the next two years, 

 

53 JX0009 at 1–2. 

54 Id. at 1.

55 Id. at 2.

56 Id. at 1–2.

57 Id. at 2.

58 Shaich Tr. 946:3–8.

59 JX2009 at 2; accord JX0564 at 79. 

60 PTO ¶¶ 113–14. 
10

the Company rolled out the remaining Panera 2.0 initiatives to all company-owned 

bakery-cafes.61 

Panera developed other initiatives during this period of innovation. In 2013, 

the Company rolled out two initiatives including Panera at Home, providing

consumer packaged goods, as well as Panera catering hubs, which were attached to 

bakery-cafes.62 In 2015, Panera launched its “Food As It Should Be” campaign, 

developing “clean food” without “artificial colors, flavors, preservatives, and 

sweeteners.”63 In 2016, Panera rolled out its national delivery program.64 

While leading Panera through these initiatives, in early February 2015, Shaich 

informed the board that he wanted to step away from Panera and pursue other 

endeavors.65 Shaich had returned to Panera when Moreton needed him. And 

although Shaich extended his time with the Company through 2015, he did not want

to remain at Panera forever.66 Shaich explained to the board that after working on 

innovations as Executive Chairman during the 2010 to 2012 period, he “had come 

back to transform” Panera and felt he had “done [his] work in getting [Panera 2.0] 

 

61 Id. ¶¶ 115, 121, 126. 

62 Id. ¶¶ 106–109. 

63 Shaich 945:19–23.

64 PTO ¶ 122. 

65 Moreton Tr. 718:21–719:11. 

66 Shaich Tr. 1017:23–1018:10. 
11

going.”67 The board outlined a succession plan during a board meeting held on 

February 26, 2015.68 The identified succession candidate, Madsen, became Panera’s 

president in May 2015 with the intention of replacing Shaich as CEO in 2016.

69

 But 

the board did not view Madsen as a suitable replacement,70 so Shaich stayed on as 

CEO. Shaich annually reminded the board of his desire to leave.71 At the time of 

the merger, Shaich owned approximately six percent of Panera’s outstanding stock.72

B. Panera Tracks Its Initiatives Through A Five-Year Strategic Plan

And Five-Year Financial Model. 

In May 2015, management assembled all of Panera’s new initiatives into a 

strategic plan (the “Five-Year Strategic Plan”).73 To track the financial effects of 

these initiatives, management also created a five-year financial model (the “FiveYear Financial Model”) that tracked “between 15 and 30 key initiatives and many 

projects underneath each of them that we had various assumptions on, how they 

would perform, how they would roll out” and forecasted five years of future results.74 

 

67 Id. 1017:23–1018:10.

68 JX0010 at 3; accord Moreton Tr. 718:14–719:11. 

69 PTO ¶ 62.

70 Moreton Tr. 800:3–17. 

71 Shaich Tr. 1017:23–1018:10. 

72 Id. 1026:11–24.

73 PTO ¶ 117; JX0315; Moreton Tr. 724:4–725:6. 

74 Moreton Tr. 724:18–22, 768:19–769:8; accord PTO ¶ 118. 
12

Management based the Five-Year Financial Model on the Five-Year Strategic Plan 

and would evaluate them side-by-side “to really understand what the vision involved 

and the costs involved in what we saw.”75 This Five-Year Financial Model operated 

as a “roadmap” that management updated every six months and that the board 

discussed, at least in part, at every meeting.76 

At its core, the 2015 Five-Year Financial Model set a goal to double earnings 

per share over the next five years and “re-engage” double-digit earnings growth, 

including projected earnings before interest, tax, depreciation and amortization 

(“EBITDA”) of nearly $750 million by 2019.77 Shaich recognized that “[f]ew 

companies have taken on as audacious a path to renewal.”

78

 

 

75 Moreton Tr. 724:4–725:6.

76 PTO ¶ 118; see also Moreton Tr. 734:19–735:4, 764:17–765:8; Shaich Tr. 1015: 19–21; 

Colasacco Dep. 197:19–198:19. Petitioners object to Respondent’s use of Colasacco’s 

deposition testimony at trial. See D.I. 108 ¶ 216; D.I. 131; D.I. 148 Ex. A at 9. Under 

Court of Chancery Rule 32, “[t]he deposition of a witness, whether or not a party, may be 

used by any party for any purpose if the Court finds . . . that the witness is out of the State 

of Delaware, unless it appears that the absence of the witness was procured by the party 

offering the deposition.” Ct. Ch. R. 32(a)(3)(B). Colasacco is a Massachusetts resident 

and Petitioners do not contend that Panera procured Colasacco’s absence from Delaware. 

D.I. 119 at 24:2–14, 25:9–11. Petitioners argue that even if the testimony could come in 

under Rule 32, Delaware Rule of Evidence 802 precludes this testimony. See Trial Tr. at 

642:11–16. Rule 32 testimony is not an out of court statement, but treated “as though the 

witness were then present and testifying.” Ct. Ch. R. 32(a). Colasacco’s testimony is 

thereby admissible under Rule 32. 

77 JX0315 at 3–4; accord Shaich Tr. 941:10–943:18 (“So I had a goal of sustained doubledigit earnings but reengaging this company and moving it forward—it was mature—and 

taking it to the next place.”). 

78 JX0315 at 131; JX0134 at 118.
13

Some board members were skeptical. Moreton described the Five-Year 

Financial Model as “what’s classically called a hockey stick projection” that faced 

“healthy skepticism in the board.”79 Lynch wrote to Shaich in October 2016, “I 

worry, though not with a lot of basis, that we are overestimating our future earnings 

power. We are now in a negative 3 transaction comp environment and I am 

concerned that we could be overestimating our ability to fight this headwind.”80 

Moreton recognized management risk-adjusted the Five-Year Financial Model “in 

part,” but “major” risk remained around execution.81 Colasacco considered Panera’s 

Five-Year Strategic Plan as “not impossible, not a lie, not a bad faith effort in any 

way,” but “one possible range of scenarios that could play out[.]”82 Some analysts 

 

79 Moreton Tr. 729:2–20; accord Colasacco Dep. 217:3–219:15 (understanding that “if it 

worked I would have considered it a home run,” but recognizing “there aren’t many 

companies that can do” “25 percent per annum compounded for five years,” so the model 

“had some risk attached to achieving it”).

80 JX0228 at 2 (emphasis in original). 

81 Moreton Dep. 218:23–219:20 (“So the risk then switches to: Is it possible? Yes. Is it a 

guarantee? No. And what’s the major . . . risk . . . is around execution. So . . . that’s 

really the time period that we’re in and how Panera saw it during my time.”). Petitioners 

identify the Company’s 90% confidence in its ability to achieve several initiatives in the 

model. See JX0616 at 29. In using this to cast the Five-Year Financial Model as risk 

adjusted, however, Petitioners improperly conflate the model’s “comp buffer”—designed 

to learn how different initiatives overlap—with risks associated with competition or 

execution. See Moreton Tr. 740:4–741:15, 860:15–861:7. 

82 Colasacco Dep. 217:3–219:15. 
14

agreed: “[W]e remain on the sidelines as PNRA’s stock appears to incorporate the 

benefits of its strategic initiatives and the outlook is not without risks.”83

C. Investors React, And Panera Weighs Its Options. 

In reaction to the Five-Year Strategic Plan, an investment fund called Luxor 

Capital threatened a proxy contest because it opposed the “very significant capital 

spending” necessary to support the plan.84 The board engaged Goldman Sachs & 

Co. LLC (“Goldman”) in March 2015 to advise it in a strategic review of potential 

opportunities to maximize stockholder value.85 On June 25, 2015, Goldman 

presented potential strategic alternatives alongside valuation scenarios under the 

Five-Year Strategic Plan.86 

Consistent with the Five-Year Financial Model, Goldman “assume[d] 100% 

implementation success with no probability weighting adjustment.”87 For this 

reason, Goldman called the Five-Year Strategic Plan “aggressive” because 

“everything would have to go exactly as was foreseen,” which “[t]hey didn’t think 

 

83 JX0104 at 1; see also JX0343 at 19 (analysts acknowledging that Panera’s strategic 

initiatives were “a very ambitious target”).

84 Moreton Tr. 720:18–721:20; Colasacco Dep. 65:19–66:20. 

85 PTO ¶ 75. 

86 See JX0019 at 18–25; PTO ¶ 120. 

87 See, e.g., JX0019 at 19–20, 24, 33, 34, 41, 42, 44, 50, 52, 56.
15

[] was very likely.”88 Goldman advised that Panera’s “growth initiatives were too 

early on in the game for the market . . . to give [Panera] full credit for [the Five-Year 

Strategic Plan].”89 Goldman evaluated a potential sale and advised that a financial 

sponsor would not have interest in Panera,

90 but identified a “limited number of 

potential strategic buyers,” with Starbucks as the most likely.91 At the end of the 

meeting, the board determined 

that while the Company would, as it had done in the past, 

continue to observe the markets and consider activities in 

the best interest of shareholders on an ongoing basis, given 

current conditions it was not in the best interest of the 

Company and its stockholders to engage in a process to 

initiate and pursue a strategic transaction or solicit interest 

from potential purchasers at this time.92 

After consulting with Goldman, Panera agreed to some of Luxor’s demands.93 

Luxor dropped their remaining demands after Panera “convince[d] them that [its] 

 

88 Moreton Tr. 773:9–774:5.

89 Id. 770:24–771:15. 

90 JX0019 at 18; Shaich Tr. 956:4–22; Moreton Tr. 770:24–771:19. 

91 See Shaich Tr. 955:24–957:7, 958:1–19; accord Moreton Tr. 770:24–771:19. 

92 JX0019 at 2. 

93 See Moreton Tr. 722:11–19 (“[W]e agreed to increase our share buyback, again a 

program we’d had going on for a long time, but we agreed to buy back $500 million worth 

of shares over a 12-month period. We agreed to evaluate selling company stores to 

franchisees without a specific number.”). 
16

G&A actually was average to low for the industry as a whole, and the technology 

investments were necessary for initiatives.”94 

D. Panera Counteracts Failures And Plants Seeds For Future 

Rewards. 

In 2016, following the adoption of the Five-Year Strategic Plan, Panera 

reduced its estimate for 2019 EBITDA by almost $128 million as “revenues hadn’t 

increased in line with” expectations and the Plan was not “going quite as smoothly 

as [Panera] had hoped.”95 Panera offset the initiatives’ high costs by orchestrating 

share buybacks, refranchising, and implementing nonstrategic cost reduction.96

In the wake of this setback, Shaich led efforts to publicize the Five-Year 

Strategic Plan to generate market recognition. Through “hundreds”97 of 

presentations, Shaich shared Panera’s plan of “sustained double-digit EPS earnings 

growth.”98 The market responded and gave Panera “a great deal of credit for the 

initiatives already done.”99 Panera’s stock rose to $214.54 by July 2016.100 

 

94 Id. 722:11–23. 

95 Id. 776:5–778:16, 778:17–779:2. 

96 Id. 785:17–786:8; JX0238 at 33. 

97 Shaich Tr. 948:6–13, 960:8–961:3; see, e.g. JX0194 at 1; JX0192 at 5, 11; JX2028 at 3, 

17; JX0032 at 51; JX0041 at 5, 22; JX0064 at 2; JX0260 at 4–5, 15; JX0331 at 3–4; JX0345 

at 4–5, 14; JX0029; JX1039; JX0063 at 3; JX0304. 

98 JX0063 at 3. 

99 Moreton Tr. 792:4–13. 

100 JX0104 at 1. 
17

E. Panera and Shaich Weigh Their Options.

In the midst of Shaich’s PR campaign, Shaich received an unusual call from 

Starbucks CEO Howard Schultz, proposing a visit.101 Shaich discussed the visit with 

Colasacco and other board members, explaining, “Howard doesn’t come up on a 

Saturday afternoon for just anything. Maybe he [i]s interested in a transaction.”

102

 

To prepare, Shaich asked Goldman for an updated comparison of selected restaurant 

companies that Goldman had presented the year before in 2015.103 This comparison 

included updated financial metrics for Starbucks and other restaurants in the fast 

growth, quick service, and casual dining segments.104 

When Schultz and Shaich met on July 31, 2016, Schultz proposed a 

collaboration between Starbucks and Panera “whereby Panera would provide food 

to Starbucks for lunch and breakfast and [Starbucks] would upgrade [Panera’s] 

coffee program.”105 After the meeting, Shaich updated Moreton, Colasacco, and 

Lynch.106 Lynch viewed this as “[t]he first step of the dance,” so that Starbucks 

 

101 Shaich Tr. 965:11–966:5; accord Moreton Tr. 793:14–22. 

102 Shaich Tr. 967:13–19. 

103 JX0111. 

104 See id. at 4–5. 

105 See JX0110; JX0118; JX0772 at 56; Moreton Tr. 793:14–22. 

106 JX0116; JX0118; JX1012; accord Shaich Tr. 968:22–969:5.
18

could pursue “a potential acquisition attempt by Starbucks of Panera.”107 Colasacco

commented that the proposed collaboration was “[c]ertainly worth exploring further, 

though raises many questions.”108 And Moreton thought it was “interesting . . . even 

if not tying every thing up in a nice bow.”109 

At the August 2 board meeting, the board reviewed elements of the Five-Year 

Strategic Plan and Five-Year Financial Model, per usual.110 During the executive 

session of that meeting, Shaich informed the board about Starbucks’ proposed 

collaboration.111 Moreton characterized the board’s response by explaining, “if 

[Starbucks] wanted to take advantage of our food and things, the best way to do that 

would be to acquire the company.”112 With that directive, Shaich had a new focus 

for future conversations with Schultz.113 

Schultz had invited Shaich to Seattle to visit Starbucks’ roastery that fall;

114

the teams met October 4 through 5.

115

 Starbucks came to discuss a joint venture, 

 

107 JX0118; Shaich Tr. 969:17-970:1. 

108 JX1012. 

109 JX0116. 

110 See JX0122 at 2; JX0128.

111 JX0116; JX0122 at 1; JX0125 at 4; accord Moreton Tr. 794:8–796:8. 

112 Moreton Tr. 796:3–8. 

113 See id. 796:9–17. 

114 See JX0239 at 2–3. 

115 See JX0156; JX0153; accord Shaich Tr. 970:14–21. 
19

with Starbucks selling Panera’s food and Panera selling Starbucks coffee.116 Shaich 

used this opportunity to attempt to solicit an offer.117 Both Shaich and Schultz 

discussed their companies’ “very intimate strategic plans.”118 During the visit, 

Shaich pitched Schultz the Five-Year Strategic Plan.119 On October 26, Shaich 

rejected Schultz’s joint-venture idea, but floated the idea that Starbucks could 

purchase Panera.120 Schultz responded: “we’re really interested in this. Let’s get a 

group of people to work on it.”121 

Moreton worked with Shaich to interface with Starbucks and help conduct 

financial analyses.122 In November, the companies discussed their shared goal “to 

determine whether [the] companies can unlock significant value by combining.”123 

Panera proposed EBITDA and synergies figures for the combined companies, which 

Starbucks generally found reasonable.124 Starbucks took this analysis and ran the 

 

116 See JX0156 at 4.

117 Shaich Tr. 970:6–972:8. 

118 Id. 971:20–972:8. 

119 Id. 970:14–21.

120 JX0197; accord Shaich Tr. 972:12–973:3. 

121 Shaich Tr. 973:4–16. 

122

 JX0243; JX0250; Moreton Tr. 797:2–798:22; Shaich Tr. 974:2–10. 

123 JX0243. 

124 See JX0250; Moreton Tr. 798:6–17. 
20

numbers internally.125 At the end of November,126 Schultz called Shaich to explain 

that after giving it “some serious thought,”127 Starbucks was “not going forward”

with the transaction.128 Although Starbucks viewed the combination as a “pretty 

good idea,” Starbucks could not “get to [Panera’s] public market price, let alone pay 

a premium”129 and “there were other things going on within Starbucks.”130 The 

parties did not discuss any further.131

In tandem with Panera’s conversations with Starbucks, in August 2016, 

Shaich acted on his own initiative and asked Goldman to facilitate an introductory 

meeting with JAB.132 Goldman inquired after JAB’s CEO Olivier Goudet,133 but 

JAB postponed meeting with Panera until “early the next year”134 because JAB was 

busy pursuing an acquisition that fall.135 

 

125 Moreton Tr. 796:21–797:1. 

126 JX0266; JX0263. 

127 Shaich Tr. 973:4–11. 

128 Id. 975:15–24.

129 Id. 974:11–22, 975:15–976:10; accord JX0625 at 4 (“There were conversations with 

Starbucks last year, they ultimately declined to proceed citing that Panera was trading too 

richly (and it has since only traded up).”); JX0772 at 56; Moreton Tr. 798:23–799:10.

130 Shaich Tr. 976:1–4. 

131 Moreton Tr. 799:24–800:2. 

132 Shaich Tr. 976:11–23; accord Bell Tr. 1143:12–15. 

133 Bell Tr. 1143:4–22.

134 Id. 1143:16–22.

135 Id. 1143:12–22; accord Shaich Tr. 976:24–977:6. 
21

F. Panera Reaches An “Inflection Point,” And Shaich Engages With 

JAB. 

Although Panera continued to face competitive pressures, it experienced 

impressive growth and success with its initiatives. Panera’s stock price rose from 

$170.00 per share in 2014 to $210.00 per share in early December 2016.136 As of 

October 2016, Panera was the ninth most valuable restaurant company in America 

with a market capitalization of $4.5 billion.137 Panera completed its Panera 2.0 

rollout for company-owned bakery-cafes by the end of 2016.138 And by the end of 

2016, Panera served approximately 9 million customers per week, making it one of 

the largest food service companies in the United States.139 

By January 13, 2017, Panera removed all of its “No No List” ingredients in 

pursuit of its “clean food” goal.140 Panera hit another benchmark on February 8, 

2017, when MyPanera accounted for 51% of the Company’s transactions, becoming 

the largest customer loyalty program in the restaurant industry.141 Other Panera 2.0 

 

136 Moreton Tr. 792:4–13; accord Shaich Tr. 976:5–10; JX0631 at 10.

137 JX1041 at 4.

138 PTO ¶ 126. 

139 Id. ¶ 91. 

140 Id. ¶ 127; JX0306. 

141 PTO ¶ 129. Panera completed rollout of its MyPanera customer loyalty program in 

November 2010. See JX0003. 
22

initiatives experienced success, with digital orders representing 26% of sales142 and 

the Rapid Pick-Up Program representing about 9% of sales.143 

On February 7, 2017, Shaich announced 2017 to be Panera’s “inflection 

point”144: “[w]ith peak investments and significant scale behind us, we are now 

focused on completing the rollout of our initiatives and reaping the benefits.”145 In 

particular, “[t]he company has guided to double digit EPS growth for 2017.”146 The 

market reacted positively to this announcement and Panera’s stock rose $20.00 that 

day.147

In this positive environment, Shaich prepared to meet JAB’s Chief Executive 

Officer, Olivier Goudet, and Head of M&A, David Bell.148 Shaich prepared for the 

meeting with Goldman, who arranged his introduction to JAB.

149

 Shaich informed 

some of Panera’s directors before the meeting, and Colasacco helped Shaich gather 

JAB’s public information.150 JAB hosted Shaich at its Washington, D.C. office on 

 

142 JX0741 at 1.

143 JX0359 at 4. 

144 JX0331 at 3–4. 

145 JX0342 at 7.

146 JX0129 at 1.

147 See Moreton Tr. 801:20–21; JX0364 at 1; JX0342 at 7.

148 JX0334. 

149 Shaich Tr. 976:11–977:6; accord JX0318; JX0334. 

150 See Shaich Tr. 977:17–978:7; JX0338. 
23

February 9.151 During the meeting, Shaich presented Panera’s standard external 

investor presentation.152 Bell interpreted the presentation as a way to try to entice 

JAB to come and make an offer for Panera.

153 During his pitch, Shaich discussed 

his thirty-year career at Panera, but was “very uncertain” about his personal plans.

154

 

Shaich saw that Goudet’s eyes lit up as Shaich discussed Panera.155 

On Friday, February 24, Shaich, Goudet, and Bell had a follow-up phone 

discussion during which JAB expressed its interest in acquiring Panera.156 The next 

day, Shaich and Colasacco met to discuss JAB’s expression of interest.157 At this 

time, Shaich did not engage a financial advisor or engage in negotiations.158 Shaich 

planned to inform the rest of the board at the upcoming Wednesday, March 1 board 

meeting.159 

 

151 PTO ¶ 130. 

152 See JX0374; PTO ¶ 130. 

153 Bell Tr. 1147:11–1148:8. 

154 Id. 1148:9–22. 

155 Shaich Tr. 1043:15–1043:24. 

156 PTO ¶ 131. 

157 See JX0287 at 9; accord Shaich Tr. 980:11–981:4; 1045:15–22.

158 Shaich Tr. 1044:5–1044:24. 

159 PTO ¶ 131; JX0407 at 1; JX0408 at 3–4. 
24

At that board meeting, Shaich informed the full board of JAB’s interest.160 

Shaich did not mention that he had initiated the conversation with JAB.161 The board 

discussed Shaich’s introductory meeting and conversations with JAB, as well as 

JAB’s potential interest in an acquisition of the Company.162 “[T]he Board 

authorized Mr. Shaich to continue conversations with JAB and to report back to the 

Board with an update as to the discussions and the status of any offer.”163 At that 

time, the board did not retain a financial advisor, as it had not received a formal 

offer.

164

 

At this same meeting, the board reviewed 2016 financial results and tracked 

them against the Five-Year Strategic Plan and the projections in the Five-Year 

Financial Model.165 Panera management typically updated the Five-Year Financial 

 

160 JX0408 at 3–4.

161 Shaich Tr. 1048:2–1048:17.

162 PTO ¶ 131; JX0408 at 3–4. 

163 PTO ¶ 131; JX0408 at 4.

164 Shaich Tr. 984:14–23 (“I don’t think anybody on the board, myself or anybody on the 

board would have thought to bring an investment banker in. We had been through this 

kind of process before, and bankers are very expensive, and we had no offer. So I think 

we needed to understand, what was JAB going to say.”); accord Moreton Tr. 804:18–

805:1; Colasacco Dep. 138:18–139:15.

165 See JX0407 at 47–102; JX0408 at 1 (“The agenda for the Board of Directors meeting 

included the following matters: administrative matters, Special Focus topics, including a 

review of the 2016 Key Initiatives, 2017 Key Initiatives and financial plan and related 

business strategy updates, review of financial results . . . .”). 
25

Model every spring and fall since May 2015.166 In March, management updated the 

Five-Year Financial Model in preparation for merger discussions with JAB.

167

 

G. JAB Makes An Offer, And Both Parties Secure Advisors. 

On March 10, 2017, Shaich met with Bell and Goudet in Washington D.C.168 

JAB offered to acquire Panera at a price of $286.00 per share in cash.169 At this 

time, Panera’s stock was trading at $234.91; the offer represented a 21.7% 

premium.170 

JAB was a serial acquirer that maintained a “playbook” for their

acquisitions.171 Following that playbook, JAB conditioned their offer to Panera on 

(i) a confidentiality provision; (ii) a public support measure for Shaich and certain 

affiliates; (iii) a no-shop provision with a fiduciary out; (iv) matching rights; and (v) 

a 4.0% termination fee.172 JAB’s terms did not include a financing or regulatory 

condition.173 JAB expressed the desire and ability to sign on April 7, 2017, with an 

 

166 PTO ¶ 118; Moreton Tr. 780:24–781:9, 859:4–16. 

167 Moreton Tr. 828:22–830:18. 

168 PTO ¶ 132.

169 Id.

170 JX0631 at 6. 

171 Bell Tr. 1107:24–1108:22; Shaich Tr. 1039:22–24. 

172 PTO ¶ 132. 

173 Id.
26

announcement on April 10, 2017.174 At trial, Bell explained the “playbook.”175 

Regarding the deal’s speed, JAB was “not interested in a protracted negotiation that 

results in significant management distraction, so they always go very quickly.”176 

Because of this short timeline, JAB also never discusses post-merger leadership roles 

during negotiations.177 Bell also explained that a bilateral deal is part of the JAB 

playbook in part because it typically leads to the lowest price.178 

JAB hired Ernst & Young in March 2017 to conduct their due diligence 

review of Panera.179 JAB conducted their diligence in five days because Panera’s 

public information and “transparency is off the charts.”180 During the process, Bell 

expressed satisfaction with the smooth diligence and was “really impressed by the 

speed and quality of the data.”181 He also noted that Panera was one of the “cleanest

companies they have ever seen.”

182

 

174 Id. ¶ 133. 

175 Bell Tr. 1104:2–1106:9, 1107:24–111:8. 

176 JX0581. 

177 Bell Tr. 1109:17–1111:8. 

178 Bell Dep. 49:9–14.

179 PTO ¶¶ 79–80. 

180 JX0581. 

181 Id. 

182 Id. 
27

As for financing, Goudet told Shaich that JAB would “use [Goldman] for our 

financing, so it is logical we take them on the buyside.”

183

 Shaich and Moreton were 

not concerned about using another advisor, despite Panera’s prior relationship with 

Goldman.184 JAB recommended that Panera use Adam Taetle from Barclays or 

David Ciagne from Morgan Stanley because it was “important [for Panera] to pick 

someone who understands [JAB’s] playbook, otherwise could be dangerous.”185 

Ciagne was JAB’s coverage banker at Morgan Stanley.186

Upon receipt of an offer, on March 14, the board engaged advisors. The board 

retained Sullivan & Cromwell LLP (“Sullivan & Cromwell”) as the board’s outside 

 

183 JX0418 at 2. Goldman participated in a $3 billion credit facility in connection with the 

merger. Goldman agreed to provide 33.3% of the credit facility, along with J.P. Morgan 

Chase & Co. and the Bank of America Corporation. PTO ¶ 76. 

Petitioners moved to restrict Respondent’s use of any JAB evidence to support its 

case. See D.I. 139 at 12 n.53. I considered and denied this argument in my March 20, 

2019 bench ruling on Petitioners’ motion in limine. See D.I. 111. I maintain that 

Petitioners’ attempt and failure to obtain additional discovery in the Netherlands precludes 

their later attempt to restrict use of any documents in this Court. See id. at 5:9–6:9. 

Petitioners deposed Bell and received documents from Bell as a custodian. Petitioners used 

Bell’s testimony and JAB documents in its post-trial arguments. Petitioners have not 

shown that Respondent relied on any JAB documents that were not produced in discovery. 

For these reasons, along with those explained in my March 20 bench ruling, Petitioners’ 

request is denied. 

184 Moreton Tr. 775:17–22; Shaich Tr. 988:19–999:4 (“I knew Goldman, but I knew many 

bankers. I had worked with others. And I think that I felt we could be well represented in 

many ways.”). 

185 JX0418 at 2. 

186 Kwak Tr. 1194:7–13. 
28

legal counsel for the potential transaction with JAB.187 Frank Aquila served as

Sullivan & Cromwell’s lead partner on the matter.188 Shaich proposed engaging 

Barclays Capital or Morgan Stanley as Panera’s financial advisor,189 but did not tell 

the board that JAB had suggested those firms, or specifically Ciagne.190 After 

deliberation and discussion, the board directed the Company to explore a potential 

engagement and selected Morgan Stanley as its financial advisor.191 Specifically, on

Aquila’s recommendation, Panera selected Michael Boublik of Morgan Stanley.192 

Boublik had not worked for JAB, and neither Bell, nor anyone else at JAB, knew 

him.193 

On March 15, Morgan Stanley cleared an initial conflicts check.194 Two days 

later, Morgan Stanley gave Panera a key request list that included the Five-Year 

 

187 PTO ¶ 77. 

188 Id. ¶ 78.

189 Id. ¶ 135. 

190 See JX0421 at 2.

191 PTO ¶ 135; JX0421 at 2. On March 15, the board initiated the engagement process with 

Morgan Stanley. PTO ¶ 137. On April 2, the Company entered into an engagement letter 

with Morgan Stanley. JX0596.

192 JX0466 at 2. Boublik was the lead senior banker from Morgan Stanley advising Panera 

management and the board in connection with the potential transaction with JAB during 

the Panera engagement. At Morgan Stanley, he served as Chairman of M&A for the 

Americas and Managing Director. PTO ¶ 71. 

193 Bell Tr. 1113:21–1114:4. 

194 PTO ¶ 141. 
29

Strategic Plan, and started putting together initial valuation metrics.195 Then, on 

March 20, Sullivan & Cromwell informed the board that Morgan Stanley “had 

cleared an initial conflicts check on March 15 and the parties were now negotiating 

an engagement letter for the transaction.”196 

On March 29, Panera management and Morgan Stanley met to review the 

Five-Year Strategic Plan and Five-Year Financial Model as updated after the March 

1 board meeting.197 Paul Kwak, a Vice President of M&A at Morgan Stanley,198 

prepared questions about Panera’s Five-Year Financial Model.199 In conducting its 

analysis, Morgan Stanley “immediately noticed that [management projections] were 

clearly more bullish and had higher growth, higher margins than what the street 

consensus was,”

200 but used the Five-Year Financial Model to develop its 

management case DCF analysis.201 

 

195 JX0689; Kwak Tr. 1256:8–1258:8. 

196 JX0448 at 1. 

197 PTO ¶ 151. 

198 Id. ¶ 72. 

199 See JX0606.

200 Kwak Tr. 1219:23–1220:16. 

201 See JX0625 at 3.
30

On March 30, the bank sent its engagement letter.202 Panera agreed to pay 

Morgan Stanley $42 million: $8 million became payable upon execution of the 

merger agreement, and the remainder was contingent upon closing.203 The 

disclosure letter identified the scope of conflict and formally disclosed all of Morgan 

Stanley’s prior dealings with JAB.204 Morgan Stanley disclosed they “have 

provided, currently are providing, and/or in the future may provide, certain 

investment banking and other financial services to the Company, The Potential 

Buyer, and the Buyer Related entities.”205 Morgan Stanley also included in the letter 

that other than Patrick Gallagher, no senior deal team member “is a member of the 

coverage team for the Potential Buyer or the Buyer Related Entities.”

206

 

Even though Panera’s deal team did not include any JAB coverage bankers, a 

JAB coverage banker twice passed messages between the JAB and Panera deal 

teams. First, on March 27 (before execution of the engagement letter), Ciagne 

emailed Boublik to communicate JAB’s fears that Morgan Stanley was not doing 

enough to assure Panera that JAB could finance the deal.207 Second, on April 1, 

 

202 JX0562.

203 JX0789 at 52–53.

204 PTO ¶ 155; JX0562.

205 JX0562 at 2.

206 Id. at 3.

207 See JX2021.
31

Boublik caused Ciagne to deliver the board’s message to JAB that “Panera is serious, 

and there has to be a higher price.”208 The board did not know that Ciagne had 

previously communicated with Boublik about financing.209 Indeed, Shaich and 

Moreton learned about that communication for the first time at trial.210 

H. Panera Rejects JAB’s Offer, And JAB Compresses The Timeline. 

On March 14, the board met to discuss JAB’s $286.00 offer.211 The board 

agreed that JAB would need to raise its offer and authorized Shaich to pursue further 

discussions in pursuit of a higher price.212 The board instructed Shaich to inform

JAB “that the Board would not agree to any proposed offer for the Company that 

was not significantly higher than the $286.00 per share currently proposed by 

JAB.”213 

The next day, Morgan Stanley conducted initial valuation work with Panera’s 

trading history, trading multiples, and precedent transaction multiples.

214

 From this 

 

208 Moreton Tr. 837:9–838:9. 

209 Shaich Tr. 1068:21–1070:1. 

210 Id. 1068:21–1070:1; Moreton Tr. 905:7–908:11. 

211 PTO ¶¶ 134, 136.

212 Id. ¶¶ 134, 136.

213 Id. ¶ 134. 

214 See Kwak Tr. 1208:6–1209:9. 
32

and JAB’s bidding precedents, Morgan Stanley was comfortable that it could 

negotiate a price that was above $300.00.

215

On March 17, Morgan Stanley advised Shaich and Moreton on JAB’s 

historical bidding approach and helped them formulate a strategy to raise JAB’s offer 

price.

216

 Shaich stayed up until 3 a.m. digesting JAB’s historical bidding 

approach.

217 While reviewing, Shaich wrote to Moreton that he wanted to push JAB 

on price; Moreton cautioned him not to push it too hard by being too greedy, because 

“pigs get fat, hogs get slaughtered.”218 

The next day, on March 18, Shaich informed JAB that although the board 

approved continued discussions and targeted due diligence, it expected that JAB 

would have to increase their $286.00 offer north of $300.00 per share.219 JAB agreed 

to discuss the possibility of offering a higher price internally and to get back to 

Shaich on March 20.220 

 

215 See id.. 

216 JX0455. 

217 See Shaich Tr. 996:10–997:5. 

218 JX0435; accord Moreton Tr. 822:9–823:1. 

219 PTO ¶ 139. 

220 Id.
33

On March 20, JAB made a second offer of $296.50 per share, with the warning 

that JAB would “not go one penny over 299. We’re not going to hit 300.”221 

Panera’s stock had closed at $255.24 the day before, so the offer represented a 16.2% 

premium to that trading price.222 The board met that same day to review the second 

offer.223 The board “supported continued discussions with JAB and JAB initiating 

due diligence on the Company but expressed its expectation that any final offering 

price be significantly higher.”224 Boublik agreed and commented, “I would hope 

that we get another collective move of at least the same magnitude.”225 

On March 22, Shaich and Moreton communicated to Bell and Goudet the 

board’s expectation to Bell and Goudet that JAB find additional value in the 

Company.

226 Shaich explained, “You’ve made a meaningful move once, and I and 

my board appreciate that, but it’s going to take another meaningful move once 

again . . . I’m confident that once we sit down and go through our business plan and 

you’ve done your diligence you’ll be able to get there.”227

 

221 Id. ¶ 140; accord Shaich Tr. 1002:9–23; JX0483.

222 JX0552 at 3. 

223 PTO ¶ 141. 

224 JX0448 at 1; see also JX0432 at 2.

225 JX0456 at 2. 

226 PTO ¶ 142. 

227 JX0494 at 1. 
34

A few days later, on March 26, JAB and Panera signed a confidentiality 

agreement and discussed the due diligence process.228 Bell testified that when JAB 

makes an offer without a financing contingency, they conduct due diligence at “the 

appropriate level” “to have this minimum amount of information in order to ensure 

that [they] could get the debt commitments” from their lenders.229 In these 

discussions, JAB asked Panera to move up the transaction with an anticipated 

announcement during the week of April 3.

230

 Shaich recognized that JAB wanted to 

move quickly,231 but responded that it was “material” to Panera that JAB “robustly 

(and genuinely) understand the drivers in the business [s]o they can fully appreciate 

the value that we understand is here and seek from them.”232

Shaich and Moreton also spoke with their legal and financial advisors about 

the feasibility, benefits, and risks of JAB’s proposed accelerated timeline.233 The 

transaction was the fastest in Kwak’s career.234 Nevertheless, Panera’s advisors said 

 

228 PTO ¶¶ 144–45. 

229 Bell Tr. 1105:3–1106:9. 

230 See PTO ¶ 146. 

231 See JX0494 at 1. 

232 JX0491. 

233 PTO ¶ 143. 

234 Kwak Tr. 1254:24–1255:3.
35

that they had adequate time.235 The board liked the shortened timeline, valuing less 

distraction.236 It was feasible for the board because of its extensive review of the 

Five-Year Strategic Plan, Panera’s financial results, and the Five-Year Financial 

Model.237 Shaich understood that the Company’s future value lay in its initiatives, 

so he conditioned the compressed timeline on meeting with JAB to review the FiveYear Strategic Plan and Five-Year Financial Model.238

 JAB agreed and the parties 

agreed to work toward entering into a definitive agreement during the week of April 

3.

239

 

On March 27, JAB’s counsel provided Sullivan & Cromwell a draft merger 

agreement and a draft voting agreement.

240

 The board did not counteroffer on deal 

price or deal terms at that time. 

Also on March 27, the Company learned that a Bloomberg reporter had called 

Bell inquiring about a possible sale of Panera.241 Shaich wrote in an email that he 

learned this through “a desperate call from [D]avid [B]ell [after] Bloomberg called 

 

235 Moreton Tr. 827:10–24; accord Kwak Tr. 1233:10–20. 

236 Colasacco Dep. 142:11–143:15. 

237 See, e.g., Moreton Tr. 748:4–13, 768:13–769:8, 780:22–781:9, 805:2–16, 839:17–

840:3; Shaich Tr. 951:18–952:2, 1015:15–21. 

238 JX0491; accord JX0490.

239 PTO ¶ 146.

240 Id. ¶ 149; JX1011.

241 PTO ¶148; JX0513. 
36

him inquiring about Panera.”242 At trial, Shaich commented that during the call, Bell 

had “anxiety in his voice” and “was very nervous and concerned about it.”243 

Despite the JAB playbook’s tenet of confidentiality,244 JAB did not walk after the 

leak. Instead, JAB began their diligence in Panera’s data room on March 28.245 

While JAB was conducting their due diligence, Morgan Stanley presented its 

initial valuation analysis to the board.246 At the March 30 board meeting, Morgan 

Stanley presented seven different valuation metrics to guide the negotiations and 

frame JAB’s outstanding offer of $296.50.247 Morgan Stanley also identified and 

ranked “Potential Interlopers” by their strategic rationale and ability to pay.248 In 

order, these included Starbucks, Chipotle, Restaurant Brands International (“RBI”), 

 

242 JX0513. 

243 Shaich Tr. 1007:7–17. 

244 See JX0418 at 2 (“We are making a friendly, confidential offer. If there is a leak, we 

will walk away.”); Bell Tr. 1104:5–16 (referencing JX0418 and stating “the way we give 

offers at JAB, among other things, is to require confidentiality. We think it’s in the mutual 

interests of both parties. It’s just the way we work. And so we said that fundamental to 

our offer was the fact that it had to remain confidential.”); Kwak Tr. 1196:22–1198:1 

(testifying that Morgan Stanley was familiar with the JAB playbook and understood that 

JAB’s threat to walk was real). 

245 PTO ¶ 150.

246 Id. ¶ 154; JX0545 at 1–2; JX0552.

247 PTO ¶ 154; accord JX0552 at 3–12 (valuing the Company through a multiples-based 

valuation matrix from the street and management cases, historical trading and multiples 

analyses, comparable companies analyses and a precedent transactions analysis). 

248 JX0552 at 14–15. 
37

Dunkin’, Domino’s, McDonald’s, Yum!, and Darden.249 Morgan Stanley ruled out 

financial sponsors,250 focused on strategic buyers like Starbucks, and explained why 

others were unlikely to compete.251 In its analysis, Morgan Stanley recognized that 

Starbucks had “[p]reviously engaged with [Panera] in acquisition discussions,” and 

“[h]ad mentioned concerns that acquisition multiple would be above where 

Starbucks traded.”252 

This analysis fit with Shaich’s and the board’s deep knowledge of the 

industry.253 According to Shaich, the “big three” were not viable options: Starbucks 

had just passed on Panera months earlier; Chipotle was in an E. coli crisis; and RBI 

had just acquired Popeyes.254 As for the remainder, Shaich knew Dunkin’ very well, 

had discussions with them, and knew they were 100% franchised, operated at smaller 

volume, and would not be interested in Panera.255 Shaich knew Domino’s CEO as 

a dear friend and understood their business was 100% franchised and 100% pizza 

 

249 Id.

250

 Kwak Tr. 1199:9–1200:3, 1228:18–1229:5. 

251 See JX0552 at 14–15.

252 Id. at 14. 

253 Shaich Tr. 1019:18–1021:16; Moreton Tr. 811:19–812:17, 824:3–12, 912:12–16.

254 Shaich Tr. 1019:18–1020:13. 

255 Id. 1020:14–19. 
38

and that they were not acquiring.256 Shaich previously had discussions with 

McDonald’s and knew that, based on mistakes in their acquisition history, they had

pulled back and were not acquiring, so Panera “wouldn’t be for them.”257 Shaich 

also had discussions with Yum! years earlier and knew that, at the time of the merger, 

Yum! faced activist pressure to leave China and also would not run company 

stores.258 Finally, Shaich knew that Darden was acquiring Cheddars and faced 

activist pressure.259 Shaich explained: “[I]t was just patently clear to me that, 

knowing what I know, and knowing these people and where this had played out, that 

there really wasn’t a viable interested party.”260 The board agreed. Moreton 

explained that “there was nobody else out there talking to [the board] about 

potentially acquiring [the Company], nor did [the board] think there would be.”261 

 

256 Id. 1020:20–23.

257 Id. 1020:24–1021:4. 

258 Id. 1021:5–9. 

259 Id. 1021:10–12. 

260 Id. 1021:13–16. 

261 Moreton Tr. 811:19–812:17; accord id. 912:7–11 (“[T]here was nobody else to reach 

out to . . . [w]e went through the process.”).
39

I. JAB Reviews Panera’s Five-Year Strategic Plan And Five-Year 

Financial Model And Makes Their Final Offer. 

Shaich met with four JAB leaders on March 31, as well as two of their 

advisors.262 The group met for three to four hours, and Shaich presented a deck titled 

“Five-Year Strategy & Financial Model.”263 The Company presented nonpublic 

information, including the status of the Five-Year Strategic Plan and the financial 

projections contained in the Five-Year Financial Model.264 Days later, on April 2, 

JAB confirmed its pre-diligence estimates for cost savings265 and internally revised 

their target price upwards from $290.00 to $305.00 per share.266 

The next day, on the morning of April 3, Bloomberg reported that Panera was 

exploring strategic options, including a possible sale of the Company to potential 

suitors such as JAB, Starbucks, and Domino’s.267 In response to the leak, Panera’s 

stock price jumped to $261.87, an 8% increase from the pre-public speculation price,

and closed at $282.63.268 

 

262 JX0546 at 1. These leaders included Bell, Axel Bhat (JAB partner and CFO), Trevor 

Ashley (JAB principal), and Tim Hennessy (JAB Beech CFO). Id. 

263 Shaich Tr. 1010:9–22; JX0564. 

264 See generally JX0564; accord Moreton Tr. 840:14–23. 

265 JX0593 at 49–50 (confirming JAB’s pre-diligence estimates and predicting $365 to 

$570 million in cost savings). 

266 Compare JX0400 at 44, with JX0593 at 65. 

267 PTO ¶ 159; JX0609. 

268 See, e.g., JX0631 at 5; JX0982 at 61. 
40

Later that day, on April 3, Shaich, Hurst, and Bufano met with JAB’s senior 

partners including Goudet, Bell, Peter Harf (JAB senior partner), Bart Becht (JAB 

partner and chairman), and two of their advisors.269 The Company presented a deck 

also titled “Five-Year Strategy & Financial Model,”270 which was substantially 

similar to the deck delivered to the other JAB leaders on March 31.271 Both decks

contained an in-depth look into the Five-Year Strategic Plan and the Five-Year 

Financial Model.272 Both decks discussed Panera’s opportunities in international 

franchising,273“Panera At Home” (including coffee),274 and technology.275 

The April 3 deck contemplated “other opportunities” that would stem from 

combining JAB and Panera.276 These opportunities included joint efforts in 

consumer packaged goods (“CPG”), coffee, international expansion, technology,

marketing, real estate modeling, sourcing, and franchising.277 The parties did not 

 

269 JX0546 at 1.

270 JX0607. 

271 Compare JX0564, with JX0607. 

272 See JX0564; JX0607; accord Moreton Tr. 840:14–23. 

273 See JX0564 at 131; JX0607 at 145.

274 See JX0564 at 141–152; JX0607 at 155–169. 

275 JX0564 at 154–158; JX0607 at 171–175. 

276 JX0607 at 229. 

277 Id. 
41

quantify the amount of savings generated by these efforts.278 After this discussion, 

Bell explained that JAB 

did some back-of-the-envelope math and got excited about 

it. But since we had no discussion with anyone about it, 

and it was a short period of time, we didn’t, quote/unquote, 

put it in the model, financially. But I will tell you––you 

even heard it earlier—coffee was core to our strategy of 

doing this. It’s just something that was difficult for us to 

quantify at the time we were doing diligence.279 

JAB did not quantify any growth opportunity synergies either before or after 

diligence.

280

 

Also on April 3, Panera countered JAB’s draft merger agreement and 

proposed lowering the termination fee from 4.0% to 2.5% of the equity value of the 

transaction.281 In response to that counter, also on April 3, JAB communicated to 

Shaich a “best and final” offer of $315.00 per share and a 3.0% termination fee.282 

The $315.00 offer represented a 34.1% premium from the March 10 trading price of 

$234.91 and a 20.3% premium from the March 31 pre-public speculation trading 

 

278 See id.

279 See Bell Tr. 1129:2–24. 

280 See JX0400 at 43; JX0593 at 64. 

281 PTO ¶ 160. 

282 Id. ¶ 161. 
42

price of $261.87.

283

 JAB informed Panera that this offer would expire when the 

United States market opened on April 5.

284

 

J. Morgan Stanley Offers Its Fairness Opinion, And Panera 

Approves The Deal.

At 9:00 p.m. on April 3, Morgan Stanley’s fairness committee met to discuss 

the proposed transaction between Panera and JAB, and found that the $315.00 per 

share offer exceeded the historical trading range, analyst price targets, public trading 

benchmarks, and the street discounted equity value analysis.285 The analysis also 

showed that the $315.00 per share offer fell within the range of precedent 

transactions, management discounted equity value analysis, and both the street and 

management discounted cash flow analyses.286 The committee prepared to present 

these findings to the board the next day. 

On April 4 at 9:30 a.m., the board held a meeting to discuss JAB’s “last and 

final” offer.287 Shaich, Bufano, and Hurst presented highlights from the “Five-Year 

Strategic Plan & Financial Model” previously shared with JAB leaders.288 During 

 

283 JX0631 at 6. 

284 PTO ¶ 161. 

285 See JX0627 at 20. 

286 See id.

287 PTO ¶ 163. 

288 Id.; JX0608; JX0628 at 1; JX0629. 
43

this meeting, management also reviewed the Company’s full Five-Year Financial 

Model with the board.289 

Morgan Stanley presented its fairness committee’s findings.290 The analysis 

included the evolution of merger discussions; a summary of JAB proposals with

implied transaction multiples; a JAB company and precedent transaction overview; 

Panera’s historical stock performance, next-twelve-month multiple measurements, 

and valuation comparables; and analyst perspectives on Panera.291 

Morgan Stanley also presented its preliminary standalone valuation summary 

from both a street case and an internal management case based on the Five-Year 

Model.

292

 The discounted cash flow analysis for the street case ranged from $231.00 

to $318.00 per share, while the management case ranged from $300.00 to $410.00 

per share.293 The board discussed these valuations at length and asked Morgan 

Stanley questions about the underlying assumptions.294 Morgan Stanley explained 

that the management case reflected assumptions for Panera’s various initiatives and 

that “all those initiatives had to go right in order to achieve this management case 

 

289 PTO ¶ 164; JX0629; JX0616; accord Moreton Tr. 840:4–20. 

290 See PTO ¶ 165; JX0631.

291 JX0631 at 1–14. 

292 Id. at 15–20. 

293 Id. at 19.

294 JX0628 at 2; Moreton Tr. 843:14–845:3. 
44

and then . . . there was execution risks in executing or in getting all those initiatives 

to the point that management was assuming within their management case.”295 

While Morgan Stanley highlighted the effect of these assumptions, it accepted

management’s data in creating the management case and did not test it for 

reasonableness.296 Morgan Stanley concluded that the merger consideration of 

$315.00 per share “was fair to and in the best interests of, from a financial point of 

view, the Company’s shareholders and that it would be prepared to issue an opinion 

to the Company and its Board to that effect.”297 

After the board discussed their perspectives on the proposed transaction and 

the valuation of the Company, “[t]he directors expressed their strong support for the 

proposed transaction, noting particularly that the price was fair for the Company’s 

 

295 Kwak Tr. 1236:18–1237:10. Kwak explained:

A few considerations: 

You’ve got to believe that 80+% of your value is in the terminus

Everything has got to go right; there is always risk of execution which may 

not be captured by our calculated WACC

All initiatives are proven strategies, but not all are proven on a large scale

Restaurant space is competitive – our guys are ahead of the pack now in terms 

of technology, for instance, but it’s a r[i]sk that others are striving to catch 

up[.] 

JX0625 at 3–4. 

296 Kwak Tr. 1221:2–11, 1235:17–1236:8, 1240:11–13. 

297 JX0628 at 2. 
45

shareholders and that the deal protection mechanisms in the merger agreement were 

not preclusive to an alternative proposal for the Company’s shares.”298 The board

then recessed and reconvened at 4:00 p.m. for the final review of the proposed 

transaction.299

At that time, Sullivan & Cromwell updated the board about the merger 

agreement, the voting agreement, and the non-competition agreement.300 Boublik 

orally delivered Morgan Stanley’s fairness opinion (confirmed the next day in 

writing)301 that the merger was fair from a financial point of view to Panera and its 

stockholders.302 The board unanimously approved the proposed resolutions to adopt, 

execute, and deliver the merger agreement.303 

On April 5, Panera and JAB issued a joint press release announcing the 

merger.304 

 

298 Id. at 3. 

299 Id. 

300 PTO ¶ 167; JX0630 at 1.

301 JX0647. 

302 PTO ¶ 167; JX0628 at 2.

303 PTO ¶ 167; JX0630 at 2.

304 PTO ¶ 170; accord JX0655.
46

K. Panera Solicits And Obtains Stockholder Approval. 

On May 12, Panera filed a preliminary proxy statement on Schedule 14A 

recommending that Panera’s stockholders vote in favor of the merger.305 On June 1, 

Panera issued a definitive Schedule 14A proxy statement, by which Panera notified 

all stockholders of their appraisal rights for their shares of Panera common stock 

pursuant to 8 Del. C. § 262, and attached a copy of 8 Del. C. § 262 as Annex C to 

the proxy.306 On June 16, Panera issued supplemental disclosures.307 On July 11, 

Panera stockholders approved the merger at a special meeting, at which over 97% 

of votes cast favored the merger, representing 80.26% of the outstanding shares.308

The merger closed on July 18.309 No potential bidders emerged at any time, 

including after Bloomberg’s March 27 request for comment or after the parties 

announced the deal on April 5.

310

 As of the merger date, Panera operated 910 

company-owned bakery-cafes and 1,132 franchisee bakery-cafes across 46 states, 

the District of Columbia, and Ontario, Canada.311

 

305 PTO ¶ 2. 

306 Id. ¶ 3.

307 Id. ¶ 4. 

308 Id. ¶¶ 5-6; JX0842 at 3. 

309 PTO ¶ 7. 

310 Kwak Tr. 1215:24–1218:2; Moreton Tr. 842:22–843:2. 

311 PTO ¶ 89. 
47

On November 8, Panera announced that effective January 1, 2018, Shaich 

would step down as Chief Executive Officer of Panera and remain with the Company 

as Executive Chairman, and Hurst would succeed Shaich as Chief Executive 

Officer.312

L. Dissenting Stockholders Seek Appraisal. 

In early July 2017, thirty Dissenting Stockholders notified Panera of their 

desire to exercise their appraisal rights pursuant to 8 Del. C. § 262 over a collective 

1,863,578 shares of Panera common stock.

313

 The Dissenting Stockholders did not 

withdraw their demands within sixty days of the effective date of the merger.314

Between August 16, 2017 and September 13, 2017, Dissenting Stockholders 

filed five separate petitions seeking appraisal relating to the merger. The Court 

consolidated those petitions into this action.315

Between December 19, 2017 and May 10, 2018, Panera prepaid twenty-nine

of the Dissenting Stockholders the full amount of the merger consideration, $315.00, 

 

312 Id. ¶ 180. 

313 Id. ¶ 9.

314 Id. ¶ 10.

315 Id. ¶ 11. 
48

and statutory interest accrued through the payment date, for each share of Panera 

common stock beneficially owned.316 

Certain Dissenting Stockholders withdrew their demands, and Panera and 

these Dissenting Stockholders jointly stipulated to dismiss their petitioners from this 

action.

317

 

The Court held a six-day trial between April 1 and April 8, 2019. Post-trial 

briefing was completed on August 1.318 The Court ordered supplemental briefing 

on August 22,319 which the parties completed on September 27.320 The Court held 

post-trial argument on October 7.321 

II. ANALYSIS

Petitioners contend that the fair value of their shares is $361.00.

322

 Petitioners 

support this valuation with a three-pronged approach. They give no weight to deal 

price.323 Instead, they give 60% weight to a discounted cash flow model prepared 

 

316 Id. ¶ 13. 

317 See id. ¶¶ 14–19.

318 See D.I. 134. 

319 D.I. 142. 

320 See D.I. 144. 

321 See D.I. 154. 

322 JX0983 at 10.

323 Id.; accord Shaked Tr. 394:10–12. 
49

by their expert, Israel Shaked, professor of finance and economics at Boston 

University’s Questrom School of Business.

324

 Petitioners attribute 30% of their 

valuation to Shaked’s comparable companies analysis, and 10% to his precedent 

transaction analysis.

Throughout this proceeding, including at trial, Respondent pursued a 

valuation of $304.44.

325

 Respondent argued that deal price minus synergies deserves 

dispositive weight. Respondent’s expert was Glenn Hubbard, the Dean and Russell 

L. Carson Professor in finance and economics at the Graduate School of Business of 

Columbia University, as well as professor of economics at Columbia University.326 

Seizing on Bell’s trial testimony regarding revenue synergies, Respondent lowered 

its valuation to $293.44 in post-trial briefing. Respondent seeks a refund of any

difference between its prepayment at $315.00 per share and fair value. 

A. Legal Standard

“An appraisal proceeding is a limited legislative remedy intended to provide 

shareholders dissenting from a merger on grounds of inadequacy of the offering 

price with a judicial determination of the intrinsic worth (fair value) of their 

shareholdings.”327 “Section 262(h) unambiguously calls upon the Court of Chancery 

 

324 JX0983 at 6.

325 See JX0982 at 55–56; accord Hubbard Tr. 1479:23–1480:6. 

326 JX0982 at 5. 

327 Cede & Co. v. Technicolor, Inc., 542 A.2d 1182, 1186 (Del. 1988).
50

to perform an independent evaluation of ‘fair value’ at the time of a 

transaction . . . [and] vests the Chancellor and Vice Chancellors with significant 

discretion to consider ‘all relevant factors’ and determine the going concern value 

of the underlying company.”328 The determination of fair value is intended to ensure 

the stockholder is “paid for that which has been taken from him, viz., his 

proportionate interest in a going concern.”329 Valuation of the corporation as a going 

concern must be “based upon the operative reality of the company as of the time of 

the merger, taking into account its particular market position in light of future 

prospects.”330 “Given that ‘[e]very company is different; every merger is different,’ 

the appraisal endeavor is ‘by design, a flexible process.’”331 

“In a statutory appraisal proceeding, both sides have the burden of proving 

their respective valuation positions by a preponderance of [the] evidence.”

332

 In 

 

328 DFC Glob. Corp. v. Muirfield Value P’rs, L.P., 172 A.3d 346, 364 (Del. 2017) (quoting 

Golden Telecom, Inc. v. Glob. GT LP, 11 A.3d 214, 217–18 (Del. 2010)); accord 8 Del. C.

§ 262(h).

329 Tri-Continental Corp. v. Battye, 74 A.2d 71, 72 (Del. 1950); accord Verition P’rs 

Master Fund Ltd. v. Aruba Networks, Inc., 210 A.3d 128, 132–133 (Del. 2019). 

330 In re Appraisal of Stillwater Min. Co., 2019 WL 3943851, at *19 (Del. Ch. 

Aug. 21, 2019) (internal quotation marks omitted) (quoting M.G. Bancorp., Inc. v. Le 

Beau, 737 A.2d 513, 525 (Del. 1999)), judgment entered 2019 WL 4750400 (Del. Ch. 

Sept. 27, 2019). 

331 Dell, Inc. v. Magnetar Glob. Event Driven Master Fund Ltd., 177 A.3d 1, 21 (Del. 2017) 

(footnote omitted) (quoting In re Appraisal of PetSmart, 2017 WL 2303599, at *26 (Del. 

Ch. May, 26, 2017), and then quoting Golden Telecom, 11 A.3d at 218). 

332 M.G. Bancorp., 737 A.2d at 520.
51

evaluating the parties’ positions, “[n]o presumption, favorable or unfavorable, 

attaches to either side’s valuation,”

333 and “[e]ach party also bears the burden of 

proving the constituent elements of its valuation position . . . , including the propriety 

of a particular method, modification, discount, or premium.”334 Because the Court 

determines fair value based on an adversarial presentation blending facts, opinions, 

and argument, the Court’s conclusions in one appraisal proceeding may not squarely 

inform its conclusions in another.335

The appraisal exercise occurs in the context of the efficient market hypothesis, 

“long endorsed” by the Delaware Supreme Court.336 “It teaches that the price 

produced by an efficient market is generally a more reliable assessment of fair value 

than the view of a single analyst, especially an expert witness who caters her 

valuation to the litigation imperatives of a well-heeled client.”337 In view of this 

principle, the Delaware Supreme Court has acknowledged “the economic reality that 

 

333 Pinson v. Campbell-Taggart, Inc., 1989 WL 17438, at *6 (Del. Ch. Feb. 28, 1989).

334 Stillwater, 2019 WL 3943851, at *18 (quoting Jesse A. Finkelstein & John D. 

Hendershot, Appraisal Rights in Mergers and Consolidations, Corp. Prac. Series (BNA) 

No. 38-5th, at A-90 (2010 & 2017 Supp.)). 

335 See In re Appraisal of Jarden Corp., 2019 WL 3244085, at *1 (Del. Ch. July 19, 2019), 

reargument granted in part, denied in part, 2019 WL 4464636 (Del. Ch. Sept. 16, 2019). 

Merion Capital L.P. v. Lender Processing Servs., L.P., 2016 WL 7324170, at *16 (Del. 

Ch. Dec. 16, 2016); Glob. GT LP v. Golden Telecom, Inc., (Golden Telecom Trial), 993 

A.2d 497, 517 (Del. Ch.), aff’d, 11 A.3d 214 (Del. 2010); 

336 Dell, 177 A.3d at 24.

337 Id.
52

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.”338 At the same time, the Delaware Supreme Court does not view “the 

market [a]s always the best indicator of value, or that it should always be granted 

some weight.”

339

 “There is no presumption that the deal price reflects fair value.”340 

“[T]he persuasiveness of the deal price depends on the reliability of the sale process 

that generated it.”341 If the sale process is not open or sufficiently reliable, “the deal 

price should not be regarded as persuasive evidence of fair value.”342 

 

338 DFC, 172 A.3d at 366.

339 Dell, 117 A.3d at 35. 

340 Stillwater, 2019 WL 3943851, at *21 (citing Dell, 177 A.3d at 21; DFC, 172 A.3d at 

366–67). 

341 Id.

342 Id. at *22; accord Aruba, 210 A.3d at 137 (“[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, 

and that view of value should be given considerable weight by the Court of Chancery 

absent deficiencies in the deal process.”); Jarden, 2019 WL 3244085, at *23 (“This court 

has heeded the Supreme Court’s guidance and regularly rests its appraisal analysis on the 

premise that when a transaction price represents an unhindered, informed and competitive 

market valuation, that price ‘is at least first among equals of valuation methodologies in 

deciding fair value.’” (quoting In re Appraisal of AOL Inc., 2018 WL 1037450, at *1 (Del. 

Ch. Feb. 23, 2018))). 
53

There is no checklist or set of minimum characteristics for giving weight to 

the deal price.343 Indeed, Delaware Supreme Court precedent announced in “Aruba, 

Dell, and DFC do[es] not establish legal requirements for a sale process.”344 A deal 

price serves as a persuasive indicator of fair value where the sale process bears 

“objective indicia of fairness that rendered the deal price a reliable indicator of fair 

value.”345 Vice Chancellor Glasscock described a “Dell compliant” process as one 

“where (i) information was sufficiently disseminated to potential bidders, so that (ii) 

an informed sale could take place, (iii) without undue impediments imposed by the 

deal structure itself.”346 In Stillwater, Vice Chancellor Laster recited several 

objective indicia of reliability approved by the Delaware Supreme Court: 

negotiations “[at] arm’s-length”;347 board deliberations without “any conflicts of 

interest”;348 buyer “due diligence and recei[pt of] confidential information about [the 

 

343 See Stillwater, 2019 WL 3943851, at *21. 

344 Id. at *22.

345 Id. at *44. 

346 AOL, 2018 WL 1037450, at *8.

347 Stillwater, 2019 WL 3943851, at *22 (citing DFC, 172 A.3d at 349). 

348 Id.; see also DFC, 172 A.3d at 375–76.
54

company’s] value”;349 and seller “extract[ion of] multiple price increases.”350 The 

Delaware Supreme Court has particularly stressed the absence of post-signing 

bidders as an objective indicator that the sale process was reliable and probative of 

fair value.351 

The presence of objective indicia of reliability does not establish a 

presumption in favor of the deal price.352 Where these indicia are present, I must 

determine whether they outweigh weaknesses in the sale process, or whether those 

weaknesses undermine the persuasiveness of the deal price.353

 

349 Stillwater, 2019 WL 3943851, at *23 (citing Aruba, 210 A.3d at 137–38); see also Dell, 

177 A.3d at 30 (review of “the Company’s confidential information”); DFC, 172 A.3d at 

355–56 (same).

350 Stillwater, 2019 WL 3943851, at *23 (citing Aruba, 210 A.3d at 139; Dell, 177 A.3d at 

28).

351 Id. (citing Aruba, 210 A.3d at 136 (“It cannot be that an open chance for buyers to bid 

signals a market failure simply because buyers do not believe the asset on sale is 

sufficiently valuable for them to engage in a bidding contest against each other.”); Dell, 

177 A.3d at 29 (“Fair value entails at minimum a price some buyer is willing to pay—not 

a price at which no class of buyers in the market would pay.”); id. at 33 (finding that 

absence of higher bid meant “that the deal market was already robust and that a topping 

bid involved a serious risk of overpayment,” which “suggests the price is already at a level 

that is fair”)).

352 Id. at *22. 

353 Cf. id. (synthesizing the three recent Supreme Court appraisal decisions in Aruba, Dell, 

and DFC).
55

B. Panera’s Sale Process Was Sufficiently Reliable To Make Deal 

Price Persuasive Evidence Of Fair Value. 

I find several objective indicia of reliability in this case. As a prefatory matter, 

Panera’s stock traded in an efficient market, such that indicia of reliability in 

Panera’s sale process support giving weight to deal price.

354

 First, as Petitioners’

process expert James Redpath recognized, the parties negotiated in an arm’s-length 

 

354

 This point does not appear to be in serious dispute. Petitioners’ opening post-trial brief 

did not assert that Panera’s stock did not trade in an efficient market. The parties discussed 

the efficiency of the market for Panera’s stock only while talking past each other about 

whether weight should be given to Panera’s stock price. Compare D.I. 138 at 60–65, and

D.I. 141 at 23, with D.I. 140 at 40–46. Out of an abundance of caution, I make the 

unsurprising finding that Panera “ha[d] many stockholders; no controlling stockholder; 

‘highly active trading’; and . . . information about the company [was] widely available and 

easily disseminated to the market.” See Dell, 177 A.3d at 25 (citation omitted). Panera 

also had a large market capitalization, substantial public float and trading volume, a low 

bid-ask spread, a high number of equity analysts, and a rapid response to transaction 

rumors. See id. at 7, 25. Hubbard’s report on these factors was persuasive and supported 

by evidence presented at trial. JX0982 at 58–61; Hubbard Tr. 1504:11–1505:14, 1506:11–

24. In my view, these straightforward factors are plainly present and provide conclusive 

evidence of an efficient market for Panera’s stock. This conclusion is undisturbed by 

Shaked’s analyses of market reactions to Panera news, which I find to be plagued by 

subjectivity in what is “new and material” information, and a failure to account for trading 

volume. See JX0988 at 83–84, 90–92. 
56

transaction.355 Redpath similarly conceded that the board was independent, and 

labored without conflicts of interest.356 

Second, JAB assessed Panera’s value using both Panera’s extensive public 

information and focused due diligence into Panera’s confidential information.357 In 

DFC, deal price was the best evidence of fair value in part because it was “informed 

by robust public information[] and easy access to deeper, non-public 

information.”358 Bell found Panera’s “transparency [was] off the charts[,]”and 

JAB’s legal advisors shared the view that “much of [JAB’s diligence] is check the 

box and that they have reviewed everything that is public.”359 Shaich explained that 

he presented the Five-Year Strategic Plan “hundreds of times” to “internal groups,

 

355 Redpath Tr. 635:6–9. Redpath is a senior investment banking partner at Cypress 

Associates, a “nationally recognized investment banking firm.” See id. 499:9–14, 505:18–

21. 

356 Id. 635:24–638:9, 643:12–644:8. Petitioners claim a special committee was necessary 

here, but Petitioners cannot point to a conflict that a special committee could remedy where 

Panera had seven independent board members on its nine-member board. 

357 JX0476 at 2; JX0583 at 1. 

358 172 A.3d at 349.

359 JX0461 at 1; JX0581; accord JX0476 at 2 (“Remember, this is a very clean public 

company, so have to tone down the voluminous generic requests . . . .”). 
57

external groups” and “every investment conference” he attended (“twenty a year”) 

“to get everybody to understand [] what’s the vision and where we were.”360 

In addition, JAB received and reviewed the specific nonpublic information 

that Shaich believed would lead JAB to see greater value in Panera.361 After 

reviewing that information, JAB internally raised their offer from $296.50 to 

$305.00, as the information confirmed a “[s]ignificant [c]ash [o]pportunity” through 

working capital and other cost savings.362 Ultimately, JAB offered Panera 

$315.00.363 Although JAB limited their access to non-public information, they did 

so as a natural result of Panera’s widespread public dissemination of meaningful

information. 

Third, Panera used Boublik’s guidance364 and Shaich’s doggedness to extract 

two price increases.365 Even operating under their own preferred terms of 

 

360 Shaich Tr. 921:7–9, 948:2–18, 960:8–961:3, 962:17–23; see, e.g., JX0194 at 1; JX0192 

at 5, 11; JX2028 at 3, 17; JX0032 at 51; JX0041 at 5, 22; JX0064 at 2; JX0260 at 4–5, 15; 

JX0331 at 3–4; JX0345 at 4–5, 14; JX0029; JX1039; JX0063 at 3; JX0304. 

361 JX0490; accord Moreton Tr. 840:7–23.

362 JX0593 at 49–50. These findings are discussed further in Section II(D), infra.

363 PTO ¶ 161. 

364 Kwak Tr. 1206:15–1207:6; accord Moreton Tr. 821:7–14 (“Q. Did Panera at any time 

in the negotiations give a, quote, unquote, counteroffer in the sense of a specific price point

at which it would agree to a deal? A. No. We never did. This was part of the strategy 

that Morgan Stanley helped craft, that there was no reason to do that. At this point, it was 

just a push for more.”). 

365 Shaich Tr. 999:9–1002:4.
58

engagement, JAB raised their price twice. The board rejected JAB’s initial $286.00 

offer, communicating its expectation that JAB would find more value for the 

Company during the diligence process.366 Boublik agreed and encouraged Shaich, 

the lead negotiator, and Moreton, a board negotiation advisor, to seek additional 

value.367 When JAB revised their offer to $296.50, JAB also explained that they 

would not raise the offer a penny over $299.00.

368 This was still too low for the 

board.369 Shaich and Moreton listened to Morgan Stanley’s guidance and believed 

the Company could break JAB’s stated ceiling price without giving a counteroffer.

370

 

Morgan Stanley was right. After conducting diligence, confirming its anticipated 

cost savings, and reviewing the Five-Year Strategic Plan and Five-Year Model, JAB 

raised its price to $315.00.371 

 

366 PTO ¶¶ 139, 141; JX0448 at 1; accord Moreton Tr. 822:1–8 (“JAB’s transactions had 

gone from the initial discussions and initial bids, through due diligence, to the end, and 

how they had a history of raising their offer price as they went through.”). 

367 Moreton Tr. 820:4–13; accord JX0519 at 1.

368 PTO ¶ 140; accord Shaich Tr. 1002:9–23; JX0483.

369 PTO ¶ 141 (“The Board supported moving forward with further discussions and due 

diligence but again expressed its expectation that any final offering price be significantly 

higher.”). 

370 See Moreton Tr. 821:7–822:8. 

371 PTO ¶ 161.
59

Fourth, no other potential bidders emerged, despite a leak during negotiations

and nonpreclusive deal protections.

372

 A leak gives potential bidders notice of the 

transaction and an opportunity to bid.373 According to Kwak, leaks typically happen 

at the tail end of a process,

374 and a potentially interested buyer with the capacity to 

acquire a $7 billion company would “have the experience and the know-how and the 

team members to know that you do need to move swiftly because at any point they 

could sign a transaction with the rumored buyer.”

375

 Kwak explained that when a 

rumored transaction surfaces, coverage bankers immediately identify and contact 

potential buyers “to explore whether th[ose] compan[ies] ha[ve] interest in pursuing 

an acquisition.”376 

The first evidence of a leak emerged on March 27, when Bloomberg called 

JAB for a comment. The leak concerned Bell greatly, evidencing that JAB feared 

 

372 Id. ¶¶ 148, 159; Kwak Tr. 1215:24–1218:2. 

373 In re Appraisal of Solera Hldgs., Inc., 2018 WL 3625644, at *14 (Del. Ch. 

July 30, 2018) (analyzing Dell and commenting that “[g]iven leaks in the press that Dell 

was exploring a sale . . . the world was put on notice of the possibility of a transaction so 

that any interested parties would have approached the Company before the go-shop if 

serious about pursuing a deal.” (internal quotation marks omitted)); cf. DFC, 172 A.3d at 

376 (identifying “the failure of other buyers to pursue the company when they had a free 

chance to do so” as an objective indicator of fairness supporting deal price). 

374 Kwak Tr. 1216:11–1217:16. 

375 Id. 1216:11–23. 

376 Id. 1216:24–1217:16. 
60

another bidder might surface. The transaction became public on April 3, when 

Bloomberg published its article.377 No bidders surfaced. 

Further, no third-party bidders expressed interest or submitted a bid during 

the three-month post-signing period after the parties announced the deal.

378 Panera’s 

deal protections included a no-shop provision with a fiduciary out, matching rights, 

a 3% termination fee, and 104 days between signing and closing.379 Morgan Stanley 

considered each post-signing protection to be customary or insufficiently preclusive 

to post-signing bidders.380 Kwak viewed a 3 to 4% break-up fee as “typical” and 

3% as “customary,”

381 and recognized that even “customary” matching rights “may 

discourage in a way and make it more challenging” for other bidders to come 

forward, but such rights would not prevent them.382 Kwak testified at trial that an 

interested bidder “could contact and put forth an offer to the company.”383 Kwak 

 

377 JX0609.

378 Kwak Tr. 1242:11–1243:3. In Kwak’s view, the leak gave interested bidders sufficient 

time to come forward before signing. Id. 1242:11–23. Redpath agreed. JX0985 at 76

(“There was sufficient time for a topping bidder to emerge post-signing.”). 

379 PTO ¶¶ 132, 161; JX0789 at 71–75, 79–81; see also JX0772 at 97–100, 106–107.

380 See, e.g., Kwak Tr. 1240:14–21, 1241:10–24. 

381 Id. 1241:10–15. 

382 Id. 1241:16–24. 

383 Id. 1241:5–9. 
61

concluded there was sufficient time between signing and closing, noting, “[I]f there 

was someone, we would have expected to at least get some form of an inbound.”384 

Petitioners have not meaningfully challenged the terms Panera’s post-signing 

passive market check, or offered any evidence that an interested bidder did not have 

a reasonable chance to bid.385 To the contrary, Redpath conceded, “[t]here was 

 

384 Id. 1242:11–23. 

385 This Court has recently posited that deal price is persuasive evidence of fair value, even 

with a limited pre-signing outreach, if the merger agreement’s deal protections are 

sufficiently open to permit a post-signing passive market check in line with what decisions 

have held is sufficient to satisfy enhanced scrutiny. Stillwater, 2019 WL 3943851, at *24–

30. As Stillwater’s holdings have been appealed to the Delaware Supreme Court, I limit 

my holding today to the unremarkable conclusion that no bidders emerged in the face of 

nonpreclusive deal protections. But with the aid of the parties’ briefing on the issue, it 

seems to me that Panera’s post-signing market check would survive enhanced scrutiny and 

therefore under Stillwater, would support deal price as fair value. For example, in C & J 

Energy, the parties bargained for a suite of deal protections, including a no-shop clause 

subject to a fiduciary out, a 2.27% termination fee, and a post-signing passive market check 

lasting 153 days. See C & J Energy Servs., Inc. v. City of Miami Gen. Emps., 107 A.3d 

1049, 1063 (Del. 2014). The Delaware Supreme Court explained that under this suite, “a 

potential competing bidder faced only modest deal protection barriers,” id. at 1052, and 

“there were no material barriers that would have prevented a rival bidder from making a 

superior offer,” id. at 1070. In support, the Delaware Supreme Court approvingly cited In 

re Dollar Thrifty Shareholder Litigation, 14 A.3d 573, 612–13, 615 (Del. Ch. 2010). In 

Dollar Thrifty, this Court found the board used reasonable judgment to deal exclusively 

with the buyer without conducting a pre-signing market check where deal protections 

included a no-shop provision with a fiduciary out, matching rights, a 3.9% termination fee, 

and a passive post-signing market check lasting 126 days. Id. at 592–93, 614–16. And in 

In re PLX Technology Inc. Stockholders Litigation, the Delaware Supreme Court affirmed 

this Court’s damages ruling where the trial court determined damages based on a quasiappraisal theory that the company should have remained a standalone company. 211 A.3d 

137 (Del. 2019) (TABLE), aff’g In re PLX Tech. Inc. S’holders Litig., 2018 WL 5018535 

(Del. Ch. Oct. 16, 2018). At trial, this Court found that the sale process as a whole was 

sufficiently reliable to reject a DCF methodology where the process included a fifty-day 

passive, post-signing market check with a suite of deal protections, including a no-shop 

with a fiduciary out, unlimited matching rights, and a 3.5% termination fee. PLX, 2018 
62

sufficient time for a topping bidder to emerge post-signing.”386 After the leak and 

the public deal announcement, other market participants “failed to pursue a merger 

when they had a free chance to do so.”387 “The failure of any other party to come 

forward provides significant evidence of fairness, because ‘[f]air value entails at 

minimum a price some buyer is willing to pay—not a price at which no class of 

buyers in the market would pay.’”388 

In particular, none of the “big three”389 potential bidders that Morgan Stanley 

identified—Starbucks, Chipotle, and RBI—showed any interest in bidding for 

Panera, both before and after the parties announced the deal. Chipotle knew about 

the leak before the deal signed, but did not express interest before or after signing.

390

 

 

WL 5018535 at *2, *26–27, *44, *55. Panera’s deal protections differ little from those in 

C & J Energy, Dollar Thrifty, and PLX. Panera’s 3.0% termination fee falls on the low 

end of the range presented by these deals. As for the time between announcement and 

closing or injunction, Panera’s falls in the middle. Each deal contained a no-shop provision 

with a fiduciary out, and Dollar Thrifty and PLX included matching rights. Panera’s deal 

protections fall within what Delaware courts have held to satisfy enhanced scrutiny.

386 JX0985 at 76.

387 DFC, 172 A.3d at 376; accord Stillwater, 2019 WL 3943851, at *35. 

388 Stillwater, 2019 WL 3943851, at *42 (quoting Dell, 177 A.3d at 29); see also Dell, 177 

A.3d at 32–34; Aruba, 210 A.3d at 136.

389 Shaich Tr. 1019:18–1020:13. 

390 See JX0700 at 2. 
63

Both RBI and Chipotle sent post-announcement congratulatory messages to Morgan 

Stanley after the parties announced the deal.391

Finally, Panera solicited all logical buyers consistent with its knowledge of 

the Company’s value and the market. The Delaware Supreme Court has identified 

“outreach to all logical buyers” as a key indicator of reliability.392 Petitioners 

contend that Panera engaged in a closed, single-bidder strategy during the presigning process. Respondent asserts that Panera engaged “all logical buyers.”393

 

In Dell, the board similarly limited its pre-signing canvass to two bidders,

based on its financial advisor’s recommendation that those two firms were “among 

the best qualified potential acquirers” and that “there was a low probability of 

strategic buyer interest in acquiring the company.”394 The Dell board also conducted 

a go-shop, soliciting interest from sixty-seven potential bidders.395 As a result, the 

 

391 See id.; JX0654 at 1–2. The other referenced potential bidder in the Bloomberg article, 

Domino’s, expressed that it was not interested and was not “having any conversations 

regarding the purchase of Panera” because it has “a lot more opportunity for growth in 

pizza.” JX0609 at 2, 4. 

392 Dell, 117 A.3d at 35.

393 Id.

394 Id. at 9 (quoting In re Appraisal of Dell, 2016 WL 3186538, at *6 (Del. Ch. May 31, 

2016), aff’d in part, rev’d in part sub nom. Dell, Inc. v. Magnetar Glob. Event Driven 

Master Fund Ltd., 177 A.3d 1 (Del. 2017)). 

395 Id. at 12. 
64

Supreme Court determined the deal price “deserved heavy, if not dispositive,

weight.”396 

Panera led outreach to all logical buyers: Starbucks and JAB. The 

negotiations with the two companies followed the same pattern. Shaich asserted

Panera’s value based on the Five-Year Strategic Plan to “sell[]” the company, or 

solicit interest,397 listened to gauge interest, and then consulted with the board.398 

The failed negation with Starbucks prepared Shaich and the board to negotiate with 

JAB. 

As a recap, in June 2015, Goldman identified several potential strategic 

bidders, and identified Starbucks as Panera’s most likely buyer.399 Starbucks was 

the most likely bidder because Panera was “such a valued company” “trading at very 

high multiples.”400 Goldman concluded a financial buyer was unlikely, and the 

board understood that financial sponsors were limited and none could afford the 

Company.401 With that analysis, the board decided that it should remain an 

 

396 Id. at 23.

397 Compare Shaich Tr. 970:14–21; 971:20–973:3, with id. 978:8–979:18; accord Bell. Tr. 

1147:11–1148:8. 

398 Compare Shaich Tr. 968:9–969:5, with id. 980:8–981:4, 983:7–984:13.

399 JX0019 at 18; Shaich Tr. 955:7–956:3, 958:1–19; accord Moreton Tr. 770:22–771:19. 

400 Shaich Tr. 955:18–23; accord Moreton Tr. 770:22–771:19. 

401 Shaich Tr. 956:14–957:7. 
65

independent company, but that “the Company would, as it had done in the past, 

continue to observe the markets and consider activities in the best interest of 

shareholders on an ongoing basis.”

402

 

About a year later, in July 2016, Starbucks initiated a possible collaboration403

and the board instructed Shaich to solicit Starbucks’ interest in an acquisition.

404

 In 

August 2016, Shaich started the conversation with JAB, another potential buyer that 

was conducting acquisitions at “huge multiples.”405 Shaich explained: 

I saw an article in Nation’s Restaurant News, I think [JAB] 

had just done an acquisition. They were buying 

companies every six months at huge multiples. And I 

thought they were at least worth getting to know in some 

way, so I picked up the phone and called Goldman, said 

do you know these guys and can you introduce me. That 

was August.406

After August, Panera continued its negotiations with Starbucks, which concluded by 

December 2016.407 JAB expressed interest in meeting with Shaich, but with another 

 

402 JX0019 at 2; accord JX0022 at 3–4 (Goldman’s November 4, 2015 board presentation 

confirming the board’s decision to remain a standalone company due to the broader market 

trends). 

403 See JX0110; JX0118; JX0772 at 56. 

404 JX0125 at 4; Moreton Tr. 795:10–796:17.

405 Shaich Tr. 976:11–23. 

406 Id. 

407 Id. 975:15–24; Moreton Tr. 798:23–799:10. 
66

ongoing acquisition, JAB did not engage with Shaich until February 2017.408 After 

JAB expressed interest in acquiring Panera on March 24, Shaich probed Goldman 

for more information about the acquisition landscape, especially after RBI

announced its acquisition of Popeyes on February 21.409 Goldman replied, “Best 

buyer today is a JAB, with a long term perspective that counters near term valuation 

trends. Or Starbucks. Or a merger with someone like Chipotle.”410 Shaich shared 

Goldman’s analysis with Colasacco.411 

As conversations with JAB proceeded, Morgan Stanley identified the same 

four strategic primary strategic buyers as Goldman: JAB, Starbucks, Chipotle, and 

RBI.412 Morgan Stanley also excluded other potential acquirers. Morgan Stanley 

recognized that Dunkin and Dominos were highly leveraged like RBI and all three 

would have difficulty paying all cash.413 Beyond this, Morgan Stanley 

recommended that Dunkin and Dominos also had “slightly different business 

 

408 Shaich Tr. 976:24–977:6; accord JX0318; JX0334. 

409 JX0399 at 1–2. 

410 Id.. 

411 Id. at 1. 

412 JX0625 at 4; JX0631 at 23. The companies that Petitioners cite as potential buyers were 

identified by Morgan Stanley and passed over because of fit or limitations. See JX0631 at 

23–24; JX0625 at 4. 

413 See JX0625 at 4. 
67

models” and lacked a clear strategic fit.414 With this guidance from both Goldman 

and Morgan Stanley, the board viewed JAB as the only remaining logical bidder. 

Like Goldman, Morgan Stanley viewed Starbucks as the only other potential buyer 

that could afford Panera,415 but the board had already exhausted that option.416 The 

board knew that Chipotle was recovering from a food safety crisis and otherwise 

focused on share buybacks.417 And the board knew that RBI had agreed to acquire

Popeyes.418 The board concluded that no other bidders were out there.419 Morgan 

Stanley confirmed the board’s conclusion: “JAB represents the buyer with the most 

interest, wherewithal, and ability to pay and would be a good fit.”

420 Moreton 

 

414 Id.

415 JX0631 at 23; accord Kwak Tr. 1226:21–1227:12. 

416 Shaich Tr. 974:11–22, 975:23–976:10, 1019:18–1020:5; accord JX0625 at 4 (“There 

were conversations with Starbucks last year, they ultimately declined to proceed citing that 

Panera was trading too richly (and it has since only traded up).”); JX0772 at 56; Moreton 

Tr. 798:23–799:10. 

417 Shaich Tr. 1020:6–9; JX0631 at 23. 

418 See JX0631 at 23. 

419 Moreton Tr. 811:19–812:17 (“[T]here was nobody else out there talking to [the board] 

about potentially acquiring [the Company], nor did [the board] think there would be.”); see 

also id. 912:7–11 (“[T]here was nobody else to reach out to . . . [w]e went through the 

process.”). Market analysts confirmed this conclusion after the Bloomberg leak: “[W]e 

believe Starbucks is the only one with any real (even slight) probability. We also note that 

JAB might be interested, given its acquisitions of Krispy Kreme, Einstein/Noah, Keurig, 

Caribou, and Peet’s Coffee. . . . All-in, we suspect JAB would be the more likely suitor 

than Starbucks, as we believe a newly minted CEO and a relatively sizable acquisition 

would increase Starbucks’ risk profile.” JX0609 at 12–13. 

420 JX0625 at 4. 
68

summarized, “we had just gone through the key strategic buyer. Starbucks had told 

us no. And Morgan Stanley and Goldman had told us there were no financial bidders 

out there. So we really thought this was an opportunity to see if we could get a price 

that was reasonable for shareholders.”421 The leak added certainty to the board’s 

conclusion.

422

 

 Petitioners argue that a logical buyer universe of only two buyers is “absurd” 

because “Panera could not have known buyers were ‘out’ without ever conducting a 

market check.”423 The Delaware Supreme Court has held that when “the directors 

possess a body of reliable evidence with which to evaluate the fairness of a 

transaction, they may approve that transaction without conducting an active survey 

of the market.”424 And “if a board fails to employ any traditional value maximization 

tool, such as an auction, a broad market check, or a go-shop provision, that board 

must possess an impeccable knowledge of the company’s business for the Court to 

determine that it acted reasonably.”425

 

421 Moreton Tr. 824:3–12.

422 JX0625 at 4 (“Since the leak yesterday, no one has come forward to express an 

interest.”). 

423 D.I. 140 at 17.

424 Barkan v. Amsted Indus., Inc., 567 A.2d 1279, 1287 (Del. 1989). 

425 In re OPENLANE, Inc. S’holders Litig., 2011 WL 4599662, at *5 (Del. Ch. 

Sept. 30, 2011).
69

I find that the board possessed a robust body of evidence that it used to

determine the universe of logical buyers. The board’s impeccable knowledge of the 

market in the pre-signing phase, and the lack of interested bidders in the post-signing 

phase, leads me to find that the board led outreach to all logical buyers. Because 

Panera engaged with Starbucks first, JAB’s confidentiality requirement did not 

preclude the board’s outreach to all logical buyers. The absence of a wider canvass 

or go-shop does not change the reliability of Panera’s outreach.

426

 This decision was

confirmed when no other bidders came forward either after the leak or during the 

post-signing passive market check. The preponderance of the evidence shows that 

the board used its knowledge of the market and its advisors’ advice to engage all 

logical buyers in a value-maximizing process. 

Panera’s deal process bears many indicia of reliability, including an arm’s 

length negotiation, a disinterested and independent board, numerous price increases,

no emerging bidders post-leak or post-announcement, and outreach to all logical 

buyers. The process also terminated with an open passive post-signing market 

 

426 Petitioners point to Morgan Stanley’s label of “Potential Interlopers” in claiming that 

Panera should have contacted additional potential bidders. As explained herein, the 

preponderance of the evidence shows that Panera contacted all logical buyers. Morgan 

Stanley’s label, which they later changed to “Potentially Interested Parties,” does not 

disturb this result. Compare JX0552 at 14–15, with JX0631 at 23–24; accord Kwak Tr. 

1237:11–20. And even if the use of the term “interlopers” signaled a fear of intruders, as 

explained herein, Morgan Stanley advised the board to negotiate for less restrictive deal 

terms, enabling another interested party to bid. 
70

check. I therefore turn to the weaknesses in the process to determine whether they 

undermine its reliability. 

C. Weaknesses In Panera’s Process Do Not Undermine The Deal 

Price’s Reliability. 

Petitioners point to weaknesses in the pre-signing process that they believe 

undermine the deal price’s reliability. They focus on actions taken by the board, 

Shaich, and Morgan Stanley. In all, I find that the transaction’s flaws do not 

undermine its numerous indicia of reliability. 

1. The board did not undermine the deal process.

Petitioners characterize the pre-signing phase as exhibiting the board’s 

“apathy,” ignorance, and “flat-footed[ness].”427 According to Petitioners, these traits 

manifested in the board’s failures to 1) authorize Shaich’s initial outreach to JAB, 

2) oversee the negotiations, 3) negotiate with a proper valuation, 4) reject JAB’s 

confidentiality and speed provisions, and 5) negotiate deal protections. 

First, while the board had authorized Shaich to solicit Starbucks’ interest in 

acquiring Panera,428 Shaich did not obtain specific board authorization for his 

August 2016 outreach to JAB. Shaich’s independent outreach did not generate a 

response until early 2017. At that time, when JAB offered to meet with Shaich, 

 

427 D.I. 139 at 20, 48. 

428 See JX0116; JX0122 at 1; JX0125 at 4; accord Moreton Tr. 794:8–795:13, 796:3–8.
71

Shaich informed Colasacco and other board members.429 When JAB expressed an 

interest in acquiring Panera on February 24, 2017, Shaich informed Colasacco the 

next day,

430 and informed the board three business days later on March 1.431

 Thus, 

although Shaich initiated Panera’s outreach to JAB, he timely and fully updated the 

board when JAB expressed interest in a transaction.432 Shaich did not negotiate for 

a role post-merger or negotiate for change-in-control compensation.433 Petitioners 

provided no evidence that the outreach alone––Shaich’s only act that was not 

specifically authorized—led to any diminution in value or in the board’s power to 

negotiate or decline a transaction with JAB. 

Second, while Shaich initiated and led the negotiations, the board exercised 

active oversight. The board of directors “has the sole power to negotiate the terms 

 

429

 See JX0338; Shaich Tr. 977:17–978:7; accord Moreton Tr. 803:7–11 (“Did any of the 

directors know about Mr. Shaich’s discussions with JAB before the March 1st board 

meeting? A. Certainly, I did. I believe Domenic did, and perhaps Tom [Lynch] did.”).

430 See JX0287 at 9; accord Shaich Tr. 980:11–981:4.

431 JX0408 at 3–4; accord Moreton Tr. 802:17–803:11. Moreton described Shaich’s 

“typical way of communicating [as] concentric circles, first with [him], and then Domenic 

[Colasacco], our lead director, and Tom Lynch, and then the board as a whole.” Moreton 

Tr. 794:2–7. Shaich testified about this procedure, and explained that on an unspecified 

date he informed the board that he used Goldman to reach out to JAB. See Shaich Tr. 

1048:2–23. Shaich had followed this same pattern in the Starbucks negotiations. When 

Schultz proposed a collaboration with Panera on July 31, 2016, Shaich informed Moreton, 

Lynch, and Colasacco that evening, and informed the board two days later on August 2. 

See JX0118; JX0116; JX0122 at 1; JX0125 at 4; accord Moreton Tr. 793:14–795:13.

432 JX0408; Shaich Tr. 983:7–984:13. 

433 JX0421 at 1; Bell Tr. 1109:17–1111:8. 
72

on which the merger will take place and to arrive at a definitive merger agreement 

embodying its decisions as to those matters.”434 The preponderance of the evidence 

shows the board negotiated the terms of the merger and unanimously approved the 

final merger agreement. 

A CEO’s rogue negotiations can undermine a deal process. In Jarden, the 

CEO “immediately took charge and, consistent with a stereotypical ‘cut to the chase’ 

CEO mentality, he laid Jarden’s cards on the table before the negotiations began in 

earnest and before the board and its financial advisors had a chance to formulate a 

plan.”435 Beyond this, the Jarden CEO failed to inform the board of the 

negotiations.436 He also did not receive authorization from the board to suggest a 

price, make counteroffers, or negotiate his “change-in-control compensation,” but 

did so anyway.437 These facts contributed to the Court’s finding that the merger 

price was not a reliable indicator of fair value.438 

 

434 Stephen M. Bainbridge, Mergers and Acquisitions 56 (2d ed. 2009) (citing 8 Del. C. § 

251(b)); accord 8 Del. C. § 141 (“The business and affairs of every corporation organized 

under this chapter shall be managed by or under the direction of a board of directors . . . .”).

435 Jarden, 2019 WL 3244085, at *24 (footnote omitted). 

436 Id. at *9, *24.

437 Id. at *24.

438 Id. at *25. 
73

I do not find similar troubling facts in this case. Unlike in Jarden, the board 

directed Shaich’s negotiations, and Shaich observed the bounds of the board’s 

authorization. Shaich informed the board of JAB’s interest before JAB made an 

offer.439 At that time, the board authorized Shaich to “continue the conversations 

with JAB and report back to the Board with an update as to the discussions and the 

status of any offer.”440 When JAB offered to acquire Panera on March 10, 2017, for 

$286.00 per share, Shaich formally informed the board on March 14.441 The board 

instructed Shaich to move forward with the discussions,

442 but directed him to

communicate to JAB that the board “would not agree to any proposed offer for the 

Company that was not significantly higher than the $286.00.”443 

The board also used Sullivan & Cromwell as its outside legal counsel for the 

potential transaction with JAB.444 Sullivan & Cromwell advised the board during 

 

439 JX0408 at 3–4 (Shaich reported, “while no offer had been made during those 

discussions, Olivier Goudet, Chief Executive Officer of JAB, and David Bell, Head of 

M&A of JAB, indicated that JAB had internally discussed the potential for a transaction 

with the Company and JAB was considering making an offer to buy the Company”); 

accord Shaich Tr. 977:23–978:7. 

440 JX0408 at 4.

441 PTO ¶ 134.

442 JX0421 at 1–2. 

443 PTO ¶ 134. 

444 Id. ¶ 77. 
74

its March 14 meeting and helped the board select financial advisors.445 On March 

15, the board initiated the process to retain Morgan Stanley as itsfinancial advisor.446

From then on, Shaich and Moreton worked with the board and Morgan Stanley to

adopt a proven strategy to raise JAB’s price through diligence.

447

When JAB raised their offer to $296.50 per share on March 20,

448 Shaich 

informed the board that same day.449 At the meeting, the board considered the offer,

and “various directors asked questions and provided their thoughts and 

comments.”450 Shaich testified that “the board supported [him] in pushing” JAB to 

a higher price451 and “expressed its expectation that any final offering price be 

significantly higher.”452 

Shaich conveyed that message to JAB and focused on generating additional 

value through the diligence process.453 When JAB asked to move up the 

 

445 Id. ¶¶ 134–135; JX0466 at 2. 

446 PTO ¶ 137. 

447 JX0455, JX2019; Kwak Tr. 1206:15–1207:6, 1208:6–1209:9; Moreton Tr. 821:7–14, 

821:15–822:8; Shaich Tr. 996:15–1000:11. 

448 PTO ¶ 140; 

449 Id. ¶¶ 140–41; see JX0448 at 1.

450 See JX0448 at 1. 

451 Shaich Tr. 1004:14–18. 

452 PTO ¶ 141; JX0448 at 1.

453 See JX0494 at 1; JX0491; JX0490; JX0519.
75

announcement by a week, Shaich discussed this proposal with Moreton, Bufano, and 

the Company’s legal and financial advisors, and explained he did not find the 

compressed timeline material; he cared about JAB understanding Panera’s value.454 

Accordingly, Shaich told JAB that “[w]e think we need to spend some more time 

with you so we can show you the prospects in our plan, in order to get you 

comfortable at a value that my board and I can support.”455 While Shaich led 

diligence meetings between Panera and JAB, the board counteroffered against JAB’s 

4.0% termination fee, proposing 2.5%.456 

At the culmination of JAB’s diligence, Shaich informed the board of JAB’s 

final offer.457 The board then reviewed the Five-Year Strategic Plan and Five-Year 

Model,458 vetted the deal with Morgan Stanley,459 and ultimately “expressed their 

strong support for the proposed transaction.”460 Later that same day, the board 

reconvened to discuss the proposed merger with Sullivan & Cromwell.461 After 

 

454 See JX0491. 

455 JX0494 at 1; accord JX0490.

456 PTO ¶ 160. 

457 Id. ¶ 163. 

458 Id. ¶ 164; JX0608; JX0629. 

459 PTO ¶ 165; JX0631. 

460 JX0628 at 3. 

461 PTO ¶ 167.
76

discussing the proposed merger, the board unanimously approved the proposed 

resolutions to adopt, execute and deliver the merger agreement.462 The 

preponderance of the evidence shows that the board directed Shaich’s negotiations 

and “arrive[d] at a definitive merger agreement embodying its decisions as to th[ose]

matters.”463 Petitioners have likewise failed to prove that Shaich acted outside the 

bounds of the board’s authorization. 

Third, Petitioners assert the board negotiated in the dark, without a formal 

valuation by its advisors. The board entered negotiations with an existing deep 

knowledge of internal metrics of Panera’s value. During the negotiations, the board 

analyzed seven valuation metrics with Morgan Stanley. When considering JAB’s 

final offer, the board evaluated Morgan Stanley’s standalone valuation for Panera. 

Initially, the board did not have a full valuation, but it had steeped itself in 

management’s numbers. At several prior board meetings, the board reviewed parts

of the Five-Year Strategic Plan and Five-Year Financial Model. Without a 

valuation, the board was not prepared to make a counteroffer when JAB’s initial 

offer came in,464 so it limited its negotiating position to general pricing guidance. 

 

462 Id.; JX0630 at 2.

463 Bainbridge, supra note 434, at 56.

464 See Kwak Tr. 1214:18–1215:14 (“I don’t remember that we suggested that [the board] 

not offer a number. But . . . as an advisor, we certainly were not in a position to make any 
77

This dovetailed with Morgan Stanley’s advice, based on JAB’s bidding precedents, 

to focus on raising JAB’s ceiling.465 

On March 14, the board instructed Shaich to convey to JAB that it would not 

agree to any proposed offer for the company that was not significantly higher than 

$286.00.466 Again, when JAB raised its offer to $296.50 and stated a max price of 

$299,467 the board did not think JAB’s $296.50 was high enough and directed Shaich 

to communicate to JAB that they expected additional value.468 

Morgan Stanley met with management to review Panera’s updated Five-Year 

Financial Model, an essential input for Morgan Stanley’s valuation.

469

 Morgan 

Stanley incorporated these numbers into its implied transaction multiples and 

 

recommendations of a number at that time because we had not completed our valuation 

analysis.”).

465 See supra Section II(C)(3)(d).

466 PTO ¶ 136. Moreton explained that “significantly higher” would “convey that [the 

board] had to get the best price that we could, and that we thought that they had to go over 

their ceiling. And we thought that when they had a chance to go through and do the 

diligence on the company, that they would be able to do that.” Moreton Tr. 823:14–824:2. 

In rejecting JAB’s initial offer, Shaich explained, “[i]n order for our Board to get fully 

comfortable with and supportive of a transaction, your value will need to reflect a price 

‘that begins with a 3’ . . . [a]lthough I am not suggesting you need to be deeply in the 

$300s, I am also not talking about $300.00 either.” JX2019 at 2.

467 PTO ¶140; accord Shaich Tr. 1002:9–23; JX0483. 

468 PTO ¶ 141; JX0448 at 1.

469 PTO ¶ 151. 
78

illustrative valuation matrices.470 On March 30, Morgan Stanley presented its

preliminary valuation analysis to the board.471 This presentation contained two 

illustrative valuation matrices, Panera’s historical stock performance, next-twelvemonth multiples, operating comparables, valuation comparables, precedent 

transactions, and JAB’s precedent transaction overview.472 This presentation did not

include Panera’s standalone valuation. 

Morgan Stanley’s full valuation, including Panera’s standalone valuation,

came on April 4, the day after the board received JAB’s final $315.00 per share 

offer.473 Also on April 4, the board discussed the updated Five-Year Financial 

Model.

474

 The standalone valuation included two DCFs: the management case 

generated from Panera’s Five-Year Financial Model, and the street case generated 

from consensus of broker projections.

475

 The board assessed these metrics using its 

knowledge of the Five-Year Financial Model. When reviewing the management 

case DCF, Morgan Stanley cautioned the board that risks could prevent Panera from 

reaching the valuation predicted using the Five-Year Financial Model. Morgan 

 

470 See JX0552 at 3, 6. 

471 PTO ¶ 153; JX0545; JX0552.

472 See JX0552. 

473 PTO ¶¶ 161, 165. 

474 Id. ¶ 164; JX0608; JX0629; Moreton Tr. 831:22–832:5. 

475 See JX0628 at 2. 
79

Stanley explained that “[y]ou’ve got to believe that 80+% of your value is in the 

terminus” and highlighted risks in competition and execution.476 The board asked 

questions about “assumptions used in the presentation and differences among the 

various valuation techniques.”477 The board ultimately decided that the management 

case “wasn’t the proper way to look at the valuation.”478 Morgan Stanley presented 

its oral fairness opinion for the transaction, which it would provide in writing the 

following day.

479 After Morgan Stanley left, the board met in executive session and 

discussed the transaction and the Company’s valuation. 480 The board found JAB’s 

$315.00 offer consistent with its understanding of Panera’s value and unanimously 

approved the transaction.481 

It is problematic that the board, through Shaich, gave early guidance toward a 

price that was not “deeply in the $300s,”

482 but this pricing guidance was not a 

potentially binding counteroffer, and did not set a ceiling on the price. The board 

 

476 JX0625 at 3–4.

477 JX0628 at 2; accord Moreton Tr. 843:14–845:3.

478 Moreton Tr. 843:14–845:3.

479 PTO ¶¶ 167, 171; JX0630 at 1; JX0647. 

480 JX0628 at 3. 

481 PTO ¶ 167; JX0628 at 3 (stating that after conferring as a board, “[t]he directors 

expressed their strong support for the proposed transaction, noting particularly that the 

price was fair for the Company’s shareholders and that the deal protection mechanisms in 

the Merger Agreement were not preclusive to an alternative proposal for the Company’s 

shares”); JX0630 at 2.

482 JX2019 at 2. 
80

rejected JAB’s initial offer because it knew Panera’s value from its continual review 

of the Five-Year Financial Model. Panera’s strategy of pressuring JAB to raise its 

ceiling ushered in an offer that Morgan Stanley opined was fair and the board found 

consistent with its understanding of Panera’s value. The board checked its 

understanding of Panera’s value against Morgan Stanley’s seven valuation metrics

on March 31. And the board reviewed and discussed the Company’s standalone 

value in depth on April 4 by reviewing the Five-Year Financial Model and Morgan 

Stanley’s DCF valuations. Although the board did not have each of these valuation 

metrics at the outset of the negotiations, it reviewed each of them before it accepted

JAB’s final offer. 

Fourth, while JAB conditioned its offer on confidentiality and speed, Panera’s 

board valued those traits as a way to minimize disruption. The board had enacted 

confidentiality protections in its discussions with Starbucks, too. In both 

negotiations, Shaich and other board members used their Gmail accounts.483 Shaich 

did this because he worried “intensely” about disruption.484 At trial, Shaich 

explained: 

 

483 Compare JX0118, and Shaich Tr. 969:6–10, with JX0318 at 1, and JX0435, and

JX0491, and Shaich Tr. 1000:12–23; 1004:19–1005:7. 

484 Shaich Tr. 1000:15–23, 1004:19–1005:13. 
81

I am very sensitive to any discussion about anything that 

could be perceived as a potential acquisition and upsetting 

the company. . . . It would upset our relationships with our 

franchisees, our vendors, and, quite frankly, would shut 

down the work on this transformation plan for three to six 

months, whatever time period that would be the basic 

discussion in the company.485

Thus, JAB’s desire for speed benefitted the Company.486 Moreton explained it was 

“to our advantage to go quickly from the standpoint we don’t want to disrupt our 

people either, if things got out in the press. So everyone said they had adequate time, 

so we said, Okay. Let’s shoot for it.”487 Colasacco agreed: “I would like this period 

to be as short as possible, because I believe that eventually management becomes 

aware, general management becomes aware. In the due diligence process—other

processes, it’s hard—it’s very hard to keep a secret.”488 

This internal practice aligned with Morgan Stanley’s guidance to limit 

outreach outside of Panera. Morgan Stanley advised that JAB would “walk away if 

 

485 Id. 969:6–16; accord id. 957:8–24.

486 JX0581 (stating JAB is “not interested in a protracted negotiation that results in 

significant management distraction, so they always go very quickly”).

487 Moreton Tr. 827:17–24.

488 Colasacco Dep. 142:11–25; see also id. 143:6–9 (“[A] short period, a yea or nay period 

on whether [JAB] would . . . have an actual interest in signing an agreement was a 

positive.”). 
82

[Panera] or its advisors talk[ed] to other parties.”489 Morgan Stanley encouraged 

compliance: 

Based on our familiarity with [JAB’s] behavior, we did 

believe that their threat to walk was real. And we do see 

potential buyers throughout our projects really do walk 

away if, for example, a deal leaks or they get roped into an 

auction process, because there are certain buyers that just 

have no interest being in part of an auction process.490

Redpath confirmed that “if you were serious about JAB, you would need to pursue 

those discussions on an exclusive basis.”491 

When JAB sought to accelerate the process by one week, Shaich conditioned 

the tight timeframe on “a full vetting of the five-year and our strategic presentation 

because for [Panera] this is a discussion of value” to ensure that JAB would “robustly 

(and genuinely) understand the drivers in the business [s]o they [could] fully 

appreciate the value that we understand is here and seek from them.”492 The board 

also ensured Panera’s advisors had adequate time.

493 After conducting diligence and 

 

489 JX0418 at 2. 

490 Kwak Tr. 1197:16–1198:7. 

491 Redpath Tr. 658:1–11. 

492 JX0491. 

493 Moreton Tr. 827:17–24; accord Kwak Tr. 1233:14–20. 
83

attending these meetings, JAB internally revised their target price upwards to 

$305.00 per share494 and eventually offered $315.00.495 

Finally, contrary to Petitioners’ complaint, the board negotiated for less 

restrictive deal protections. Panera’s deal protections included a no-shop provision 

with a fiduciary out, matching rights, and a 3% termination fee.496 During 

negotiations, the board achieved a reduction in the termination fee from 4.0% to 

3.0% by counteroffering 2.5%.

497

 Kwak testified, “a 3 percent break-up fee is 

customary. And our rule of thumb is, generally for a transaction of this size, 3 to 4 

percent is typical.”498 Kwak testified that the deal’s no-shop with the fiduciary out 

and matching rights were also customary.499 Redpath agreed.500 

The board successfully negotiated a lower termination fee. Otherwise, it 

assented to the no-shop with a fiduciary out because the board understood that JAB 

was the only remaining logical buyer. The board otherwise assented to the deal 

 

494 JX0593 at 65. 

495 PTO ¶ 161. 

496 Id. ¶¶ 132, 161; JX0789 at 71–75, 79–81; see also JX0772 at 97–101, 106–107.

497 PTO ¶¶ 160–61. 

498 Kwak Tr. 1241:10–15. 

499 Id. 1240:14–21, 1241:16–24.

500 JX0990 at 39. 
84

terms, including matching rights, which its advisors viewed as “customary.”501 

Petitioners have not shown that the board failed to challenge JAB’s suggested deal 

protections. Instead, the board “bargain[ed] for value in negotiating the deal 

protections and only acceded to the termination fee when it reached terms regarding 

price and deal certainty that it viewed as attractive.”502 

The preponderance of the evidence does not support a finding that the Panera 

board was apathetic, ignorant, or flat-footed. Rather, I find that the board started the 

negotiations well versed in Panera’s financials and projections; empowered Shaich 

to press JAB to raise its price and fully consider Panera’s internal evidence of value, 

and supervised the negotiations; obtained a full valuation in time to meaningfully 

consider JAB’s final offer within JAB’s compressed timeline; and successfully 

negotiated less restrictive deal protections. The board’s performance does not render 

Panera’s pre-signing process unreliable. 

 

501 Kwak Tr. 1241:16–22 (“Q. And there were also matching rights in the merger 

agreement here. In Morgan Stanley’s view, did matching rights prevent other bidders from 

coming forward? A. It doesn’t prevent. It may discourage in a way and make it more 

challenging, but it doesn’t prevent other bidders from coming forward.”). 

502 Dollar Thrifty, 14 A.3d at 614.
85

2. Shaich’s personal interests did not undermine the sale 

process.

Petitioners contend that Shaich led negotiations despite personal conflicts, 

specifically his desire to retire. Shaich’s prior attempts to step down had been 

unsuccessful, and Shaich disliked aspects of running a public company.

503

According to Petitioners, Shaich acquiesced to JAB’s demand for exclusivity and 

left value on the table so that he could separate from the Company.

504

In Aruba, the Delaware Supreme Court used the deal price as the most reliable 

indicator of value when making its fair value determination.505 That was true even 

though the company’s top executive had conflicting incentives over retirement. At 

trial, this Court found that these conflicts did not undermine the deal price as an 

indicator of fair value because the conflict “would not have changed [the company’s] 

standalone value.”

506

 The Stillwater Court recently synthesized the role of conflicts 

 

503 See Shaich Tr. 1077:11–1079:14. 

504 Petitioners present a secondary contention that Shaich was apathetic on price because 

he focused on closing a deal so that he could liquidate and diversify his assets. There is no 

evidence in the record that he wished to liquidate. Redpath Tr. 645:12–646:11 (identifying 

no evidence of Shaich’s intent to liquidate his Panera assets); Shaich Tr. 1022:20–1023:1 

(“I hadn’t diversified in 36 years. Why was I going to start now?”). For this reason, I focus 

my analysis on the potential conflict from Shaich’s desire to step away from Panera.

505 Aruba, 210 A.3d at 141–42.

506 See Stillwater, 2019 WL 3943851, at *32–34 (citing Verition P’rs Master Fund Ltd. v. 

Aruba Networks, Inc., 2018 WL 922139, at *7–8 (Del. Ch. Feb. 15, 2018), reargument 

denied, 2018 WL 2315943 (Del. Ch. May 21, 2018), judgment entered (Del. Ch. 2018), 

rev’d and remanded, 210 A.3d 128 (Del. 2019)). 
86

in evaluating fair value: the “critical question” in considering a CEO’s motivation 

is whether “personal interests undermined the sale process.”507 

A CEO’s significant stock holdings may align her personal interests with the 

company’s. “When directors or their affiliates own ‘material’ amounts of common 

stock, it aligns their interests with other stockholders by giving them a ‘motivation 

to seek the highest price’ and the ‘personal incentive as stockholders to think about 

the trade off between selling now and the risks of not doing so.’”508 Alternatively, a

CEO’s personal interests can derail negotiations and cast doubt on the reliability of 

deal price as a fair value. In Norcraft, the Court found the CEO was as focused on 

securing a role with the future company as he was on securing the best deal price.

509

 

During the process, the CEO negotiated to divert funds from the merger into tax 

receivable agreements that would benefit him personally.510

Petitioners have not proven that Shaich was conflicted or otherwise 

uncommitted to obtaining the best price possible because he wanted to retire. The 

 

507 Id. at *32. 

508 Chen v. Howard-Anderson, 87 A.3d 648, 670–71 (Del. Ch. 2014) (quoting Dollar 

Thrifty, 14 A.3d at 600); see also Merion Capital, 2016 WL 7324170, at *22 (noting the 

CEO in “particular had an incentive to maximize the value of his shares, because he 

planned to retire.”).

509 Blueblade Capital Opportunities LLC v. Norcraft Cos., Inc., 2018 WL 3602940, at *25 

(Del. Ch. July 27, 2018), judgment entered, (Del. Ch. Aug. 8, 2018). 

510 Id.
87

record shows that when the Company needed him, Shaich came back to his role as 

Co-CEO with Moreton. And when Moreton had to step down, Shaich stayed on. 

Then, when Shaich’s successor failed to materialize, he promised he would not leave 

the Company in a lurch.511 Shaich repeatedly prioritized the Company’s success 

over his preferred professional trajectory. Unlike the executive in Norcraft, Shaich 

did not negotiate future employment with JAB,

512 even with analyst speculation at 

closing that Shaich could now “run the company privately[,] [n]ot a bad deal!”513

The record shows that Shaich was intent on driving the price upwards. During 

the negotiations, the board cautioned Shaich, holding him back: on March 17, 

Moreton cautioned not to push it too hard by being too greedy, because “pigs get fat, 

hogs get slaughtered.”514 The next day, Shaich informed JAB that they would have 

to increase their initial offer beyond $300.00 per share.515 During the negotiations, 

Morgan Stanley described Shaich as “supremely focused on finding a good home 

for the company and preserving the legacy of the business he’s built for 35 years.”516 

No evidence disturbs this conclusion. 

 

511 Shaich Tr. 1017:23–1018:10. 

512 Bell Tr. 1109:17–1111:8; Shaich Tr. 1023:10–13; Hurst Tr. 1349:14–1350:10. 

513 JX0777 at 2. 

514 JX0435; accord Moreton Tr. 822:9–823:1. 

515 JX2019 at 2. 

516 JX0582 at 1. 
88

My perceptions of Shaich from trial do not fit with Petitioners’ theory. Shaich 

testified that he would not have sold Panera without getting the best price.517 I 

believe him. Shaich’s commitment to realizing value for Panera appeared to run

deep. In my view, his commitment stemmed from his pride in Panera, a desire to 

reward those who had built Panera with him, and an attachment to Panera itself.518

Correspondence between Moreton and Shaich on the date of the sale shows Shaich’s 

perspective. Moreton wrote: 

Ron - I imagine that you have thought about Louie and 

your Dad more than a few times these past few days. This 

morning I woke up thinking of George Kane and him 

asking you: Ronnie - how much cash do we have. The 

answer today would be quite a lot. I am sure George (and 

your Dad and Louie) are resting peaceful and are 

incredibly proud of you. You have touched so many 

lives . . . especially mine. 519

Shaich replied, “Wonderful and very sad . . . Indeed I was thinking about my dad 

yesterday. He always told me to take the money . . . I always ignored 

 

517 Shaich Tr. 1024:7–1025:14. 

518 See, e.g., Moreton Tr. 856:11–857:15 (“Mr. Shaich went to bed thinking about Panera 

and how to make it better and woke up thinking about Panera and how to make it better. 

He had the shareholders’ interests in mind at all times.”); Shaich Tr. 1021:10–1022:19 

(“This was my life, and I very much wanted to maximize the value for that, and I very 

much wanted to do something that served all the constituencies of our company. In 

particular, our shareholders, who had hung with me through some tough times, and I 

wanted to deliver for them.”). 

519 JX0657. 
89

him . . . Though that has never been my way [t]his is probably the right time . . .”520 

Shaich’s trial testimony on this email was credibly emotional. 

After weighing all the evidence, I am convinced that Shaich would not, and 

did not, agree to a deal after a 35-year career before he found the right place and 

value for Panera. Shaich wanted to exit Panera and he led the negotiations. Those 

parallel facts do not convince me that either he or the impartial board accepted a low 

offer—or any offer—because of Shaich’s personal goals. Shaich’s desire to retire

did not undermine the deal process or diminish Panera’s standalone value. “As a 

matter of professional pride, he wanted to sell [Panera] for the best price he could.”521 

3. Morgan Stanley’s actions and advice did not undermine 

the pre-signing process. 

Petitioners view Morgan Stanley as a conflicted advisor because of the firm’s 

late conflict disclosures, financial incentives, and backchannel discussions about 

financing via a JAB coverage banker. Petitioners also try to cast doubt on the 

adequacy of Morgan Stanley’s representation. Respondent counters that Morgan 

Stanley informed the board of its prior work with JAB, and the board determined 

Morgan Stanley was not conflicted; Panera and Morgan Stanley used JAB’s 

 

520 Id.

521 Stillwater, 2019 WL 3943851, at *34. 
90

coverage banker to drive up value; and Morgan Stanley’s financial incentives 

aligned with Panera’s stockholders. I take each in turn. 

a. Morgan Stanley disclosed its prior JAB work to the 

board.522

On March 15, the board initiated the process to retain Morgan Stanley as its 

financial advisor.523 Moreton testified that he participated in those discussions, and 

that Morgan Stanley had disclosed its prior work for JAB.524 Nothing in the record 

casts doubt on this testimony.525 Then, on March 20, Sullivan & Cromwell informed 

the board that Morgan Stanley “had cleared an initial conflicts check on March 15 

and the parties were now negotiating an engagement letter for the transaction.”526 

Morgan Stanley provided its formal disclosure of past work with JAB on March 30, 

but the board already knew that Morgan Stanley had previous engagements with 

JAB.527 There is no indication that these disclosures changed the board’s view of 

 

522 As I determined above, although Shaich passed along JAB’s suggestion that the board 

should choose either Barclays or Morgan Stanley, the board’s legal advisor recommended 

Michael Boublik of Morgan Stanley, and the board followed that recommendation. See 

JX0466 at 2. Boublik did not have preexisting relationships with JAB. JAB did not select 

Panera’s financial advisors. 

523 PTO ¶ 137. 

524 Moreton Tr. 816:11–21. 

525 Even Petitioners’ process expert conceded that Morgan Stanley cleared conflicts. 

Redpath Tr. 673:16–674:1.

526 JX0448 at 1. 

527 JX0562; Kwak Tr. 1222:7–16; accord Moreton Tr. 833:21–834:1 (“[Q.] Was this the 

first time that the board was learning that Morgan Stanley had previous engagements with 
91

Morgan Stanley’s ability to serve as its financial advisor. Moreton reflected on the

disclosures and testified: 

[Y]ou wonder if it might be an advantage because they 

might understand JAB. And certainly, I had faith in the 

fact that the people that were going to work on the 

transaction on our behalf were of the utmost integrity, and 

so it didn’t bother me individually or the board as a 

collective whole.528

The facts here diverge from those in Jarden, in which the board “made no 

inquiry” about advisor conflicts and “there [wa]s no indication that either [the CEO] 

or [the advisor] made any effort to disclose their past relationships to the board.”529 

In this case, Morgan Stanley shared its past JAB work twice, including a formal 

representation letter. The board reviewed the formal disclosure in advance, even if

only by a few days, before approving the deal. Petitioners have provided no basis 

to conclude that the timing of Morgan Stanley’s disclosures undermined Panera’s 

sale process.

 

JAB? A. No. The board knew about it immediately, as we did, so this was just more 

formal.”). 

528 Moreton Tr. 816:22–817:7; see also Kwak Tr. 1197:6–1197:10 (testifying that “because 

[Morgan Stanley] had team members that [were] familiar with [JAB’s] strategy, we were 

able to, very quickly, have discussions with Ron Shaich and Bill Moreton and to educate 

them on JAB’s practices in the past”). 

529 Jarden, 2019 WL 3244085, at *15 n.194. 
92

b. Morgan Stanley’s financial incentives were 

commonplace and unremarkable. 

Contingency clauses are standard in financial advisor agreements and seldom 

create a conflict of interest. “Contingent fees for financial advisors in a merger 

context are somewhat ‘routine’ and previously have been upheld by Delaware 

courts.”530 This Court has recognized that “[c]ontingent fees are undoubtedly 

routine; they reduce the target’s expense if a deal is not completed; perhaps, they 

properly incentivize the financial advisor to focus on the appropriate outcome.”531

Petitioners contend that Morgan Stanley’s compensation relied on the signing 

and closing of the deal with JAB. Morgan Stanley’s $40 million fee was contingent

in part on signing for $8 million and in part on closing for $32 million.532 The fee 

contingency does not specify that the signing and closing must have involved JAB 

for Morgan Stanley to be compensated under the terms of the agreement. Contrary 

to Petitioners’ contention, the fact remains that, had another bidder emerged, Morgan

Stanley’s compensation would result from a “proposed sale of the Company” to “any 

buyer.”533 

 

530 Smurfit-Stone, 2011 WL 2028076, at *23 (citing In re Atheros Commc’ns, Inc., 2011 

WL 864928, at *8 (Del. Ch. Mar. 4, 2011); In re Toys ‘R’ Us, Inc., S’holder Litig., 877 

A.2d 975, 1005 (Del. Ch. 2005)). 

531 Atheros, 2011 WL 864928, at *8. 

532 JX0789 at 52–53.

533 JX0594 at 1; Kwak Tr. 1190:15–17. 
93

A conflict in advising a company in favor of a sale rather than in remaining a 

standalone company is possible. No such conflict exists here. Morgan Stanley 

presented the board with a full valuation analysis that included a standalone 

valuation based on a number of metrics, including the comparatively high 

management case based on the Five-Year Strategic Plan. And although Petitioners 

contend that Panera should not have agreed to JAB’s price because its standalone 

value was far higher, the $315.00 offer still fell within the management case’s 

valuation range.534 Rather than accepting the management case, the board 

recognized that there was execution risk to the Five-Year Strategic Plan, including 

that Shaich would not be there to guide Panera 3.0 and beyond. Both the board and 

Morgan Stanley found that the price was fair for the Company’s stockholders. In 

any event, Morgan Stanley’s fairness opinion would not have precluded a board

determination that it was better for Panera to remain a standalone company. 

c. Both parties used Morgan Stanley coverage 

contacts outside the deal team to press their 

respective advantages. 

In its disclosure letter, Morgan Stanley advised that with the exception of 

Gallagher, no senior deal team member “is a member of the coverage team for the 

Potential Buyer or the Buyer Related Entities.”

535

 Morgan Stanley did not create a 

 

534 JX0631 at 19, 38; Kwak Tr. 1280:22–1281:5. 

535 JX0562 at 3. 
94

wall between its JAB coverage team, including Ciagne, and its Panera senior deal 

team.

536 Kwak testified that Morgan Stanley “didn’t set up a wall because there was 

no conflict[.]”537

Ciagne, as a member of JAB’s coverage team, relayed two communications 

between the deal teams. In the first, on March 27, JAB told Ciagne to tell Boublik 

that JAB feared Morgan Stanley was not doing enough to assure Panera that JAB

could finance the deal.

538 In the second, on April 1, Boublik told Ciagne to tell JAB 

“Panera is serious, and there has to be a higher price.”539 Although the board did not 

know that Ciagne passed JAB’s message to Boublik,540 the board used Ciagne to 

pass its own message to JAB.

541

 

Petitioners point to Ciagne’s involvement as a fatal flaw in Panera’s process. 

If this channel affected the deal price, it would have increased it. JAB limited their

 

536 Kwak Tr. 1195:1–16, 1293:3–12, 1294:24–1295:2.

537 Id. 1293:3–12. 

538 See JX2021.

539 Moreton Tr. 837:9–838:9; accord JX0582 at 1 (“[O]ur goal is to have [Ciagne] deliver 

a message that (i) suggests our very strong confidence in [the] business and (ii) points to 

our valuation expectations, directionally.”). 

540 Shaich Tr. 1068:21–1070:1; Moreton Tr. 905:7–908:11. 

541 Moreton Tr. 837:23–838:9 (“The purpose was not for this individual, who I never met, 

to negotiate. It was simply for one more message to Olivier that the price has to be over 

$300 and they have to do the best that they can. So we were pulling every lever we could 

think of to try to get the price increase.”). 
95

message to JAB financing, while the Company used it to ratchet up pressure and 

leverage the price. In my view, this flaw did not undermine a fair process. 

d. Petitioners have not shown that Morgan Stanley’s 

advice was inadequate.

JAB’s negotiation playbook contains four key principles: bilateral, 

confidential, friendly, and fast.542 The playbook earned respect in the marketplace 

because JAB had intimated they would walk if their counterpart did not follow it.543 

But on one occasion when a JAB target, Krispy Kreme, pushed JAB to deviate to 

the target’s advantage, JAB still closed the deal.544 Morgan Stanley knew about 

Krispy Kreme’s success, and Petitioners fault Morgan Stanley for not counseling 

Panera to similarly pursue a go-shop or reduced termination fee. 

Petitioners fail to acknowledge that Morgan Stanley informed the board of 

Krispy Kreme’s negotiation process and advised Panera to adopt a similar 

negotiation strategy.

545

 Morgan Stanley educated Shaich and Moreton “very 

quickly” on JAB’s negotiation playbook and assisted them in developing their own

 

542 Bell Tr. 1107:24–1108:17.

543 Kwak Tr. 1197:16–1198:7. 

544 JX0455 at 13–23. 

545 Id. at 5, 13–23. 
96

strategy.546 On March 17, Boublik sent Shaich and Moreton a proposed script and 

slide decks summarizing “JAB Historical Bidding Precedents” and “JAB Merger 

Backgrounds.”547 Morgan Stanley presented these detailed precedent analyses when 

the board was “thinking about strategies in terms of how to go back to JAB in terms 

of negotiation . . . to show that JAB has bid up from their initial bid in the past 

and . . . to show how much they had bid up after their initial bid.”548 Shaich reviewed 

this deck and used it to inform his negotiation strategy.549 

Moreton viewed these decks as “very important” because “they were able to 

show us, in the bidding precedents, how JAB’s transactions had gone from the initial 

discussions and initial bids, through due diligence, to the end, and how they had a 

history of raising their offer price as they went through.”550 Shaich stayed up 

digesting this deck until 3 a.m.,

551 and later thanked Boublik “for [his] very valued 

 

546 Kwak Tr. 1196:22–1197:10 (attributing Morgan Stanley’s insights into the JAB 

playbook to Gallagher, who was a JAB coverage team member), 1206:15–1207:6; accord

JX0431 at 1; JX0432. 

547 PTO ¶ 138; JX0455. 

548 Kwak Tr. 1202:5–1203:9. 

549 Shaich Tr. 997:6–998:3. 

550 Moreton Tr. 821:15–822:8. 

551 See Shaich Tr. 996:10–997:5. 
97

input,” noting “it really made a difference in how [Shaich] approached 

it . . . particularly relative to the history of their other deals.”

552

 

The JAB Merger Backgrounds deck detailed the Krispy Kreme offer, strategy, 

and negotiation timeline. After JAB made Krispy Kreme an initial offer, Krispy 

Kreme asked for more time because it did not have a complete long-term financial 

plan and felt it could not yet “appropriately assess JAB Holdings’ indication of 

interest.”553 While Krispy Kreme was securing this information and advisors, JAB 

postponed the Krispy Kreme negotiations until after it closed an acquisition with

Keurig Green Mountain, Inc.

554

 While JAB was working on the Keurig deal, a 

financial buyer expressed interest in Krispy Kreme, but did not engage in 

negotiations.555 Four and a half months after the initial offer, JAB and Krispy Kreme 

resumed their negotiations.556 Krispy Kreme’s board insisted on additional value 

 

552 JX0456 at 2. At trial, Shaich explained how Boublik “pushed [him] at some critical 

times when there was a question to push for more price, and to push against JAB for more 

price.” Shaich Tr. 995:18–996:6; see also id. 1003:11–21 (“He pushed me intensely. I 

mean, you know, there’s this question, you don’t want to blow this up. On the other hand, 

you want to push for as much as you can get, X plus 1. And Michael and I went through, 

and we went through their precedent history, and I think the sense was it was a wise, all 

considered, smart bet to push this deal further, even though this was already a very 

attractive offer for the company.”). 

553 JX0455 at 15. 

554 Id. at 17. 

555 Id.

556 Id. at 18. 
98

based on their internal diligence, and threatened a go-shop unless JAB increased the 

price and reduced the termination fee.

557

 JAB accepted Krispy Kreme’s 

counteroffer, resulting in a 12% bid premium and a reduced termination fee.

558

 

Petitioners assert that Krispy Kreme negotiated for six months, when in reality, JAB 

postponed negotiations while pursuing another deal. Once they resumed 

negotiations, they lasted forty-five days. 

In comparison, Shaich initially reached out to JAB in August 2016, but JAB 

was pursuing another transaction at the time. At the conclusion of that deal, Panera 

and JAB negotiated for forty days. Unlike Krispy Kreme, Panera’s board did not 

need additional time to educate itself on Panera’s long-term financial plan: the FiveYear Financial Model was the board’s catechism. Like Krispy Kreme, the board

insisted that JAB find additional value through diligence. 

Petitioners assert that Morgan Stanley should have advised the board to seek 

a go-shop like Krispy Kreme. Krispy Kreme had another interested bidder. Panera’s 

board and Morgan Stanley understood that there were no other bidders out there with 

the interest and capacity to purchase Panera.

559

 Accordingly, instead of pursuing a 

 

557 Id. at 21. 

558 Id. at 5. 

559 Kwak Tr. 1200:4–17 (sharing Morgan Stanley’s perspective with the board that “it 

wasn’t likely that the potentially interested parties that we had, considering at that time 

their strategic rationale and a potential combination with Panera, and . . . their ability to 
99

go shop, the board obtained a lower 3.0% termination fee and conditioned JAB’s 

timeline on a review of the Five-Year Strategic Plan and Five-Year Financial Model, 

which generated an additional $18.50 in value.560 In the end, no other party 

expressed an interest in acquiring Panera, which confirms the board’s understanding 

that a go-shop would not result in a higher price for Panera stockholders. Morgan 

Stanley did not fail to advise the board about prior negotiating strategies. Rather, I 

find Morgan Stanley helped the board implement a proven negotiation strategy, with 

the lessons learned from the Krispy Kreme transaction, to generate additional value. 

Next, Petitioners contend that Morgan Stanley provided inadequate 

substantive advice by failing to perform a leveraged buyout (“LBO”) analysis, 

thereby failing to assess a financial sponsor’s ability to purchase Panera. Morgan 

Stanley understood that “for an LBO of [$]6 to $7 billion, putting in equity that 

represents more than 60 percent of the total purchase price is just not what financial 

sponsors do for their LBO.”561 Petitioners’ process expert agreed that it was unlikely 

that a financial sponsor would be interested in Panera,

562 and Petitioner’s valuation 

 

pay an all-cash offer . . . [were] going to be likely to compete with a transaction that JAB 

had put forth”); Shaich Tr. 1021:13–16 (“[I]t was just patently clear to me that, knowing 

what I know, and knowing these people and where this had played out, that there really 

wasn’t a viable interested party.”).

560 JX0491; accord JX0490.

561 Kwak Tr. 1199:9–24; see also id. 1228:18–1229:5. 

562 See Redpath Tr. 663:10–664:22. 
100

expert failed to perform an LBO analysis.563 Petitioners have not shown any flaw 

with Morgan Stanley’s focus on strategic bidders. This is especially true when 

Morgan Stanley found that financial sponsors could not afford Panera, and identified

only one bidder besides JAB that could afford Panera: Starbucks.564

To Petitioners, Morgan Stanley’s most significant shortcoming is its failure to 

evaluate Panera’s standalone value until the final day of the transaction. Petitioners 

have not shown that the board did not know Panera’s standalone value before it 

approved the merger. The board had a deep knowledge of Panera’s performance 

and projections derived from the Five-Year Strategic Plan that it reviewed at every 

meeting,565 including the March 1 board meeting.

566

 The board received and 

reviewed Morgan Stanley’s full valuation before voting for the merger.

567 That 

valuation included a standalone valuation derived from the Five-Year Strategic 

Plan.568 Petitioners have not shown that reviewing the valuation earlier would have 

convinced the board to reject JAB’s offer, or that the valuation even encouraged 

remaining a standalone entity. The deal price fell within the range of the 

 

563 See generally JX0983. 

564 Kwak Tr. 1226:21–1227:12; Shaich Tr. 1019:18–1020:5. 

565 Shaich Tr. 951:21–952:2.

566 See JX0407 at 1, 46–205; JX0408 at 2–3.

567 See JX0631. 

568 Id. at 15–20. 
101

management case DCF.

569

 While the board had very little time with the valuation, 

this flaw did not undermine value, particularly given the board’s facility with 

Panera’s financials. 

In all, I find that some of the Company’s pre-signing deal decisions were suboptimal. Morgan Stanley’s JAB coverage banker was involved in the deal 

communications, Shaich pushed for an offer “not deep in the 300s” before the board 

received a full valuation, and the accelerated timeline meant the board had very little 

time with Morgan Stanley’s valuation. I find that these issues did not undermine the 

sale process “so as to prevent the deal price from serving as a persuasive indicator 

of fair value.”570 

Panera’s board had a deep knowledge of the market and of Panera’s value. 

The board led discussions with the two logical bidders, which were identified by the 

board through their extensive personal knowledge, and by Goldman in 2015, 

Goldman in 2017, and Morgan Stanley in 2017. The board negotiated with JAB 

according to their advisors’ strategy, which was tailored to JAB and executable 

based on the board’s working knowledge of Panera’s value. The board authorized 

Shaich to lead these negotiations, which he did in reliance on board members and 

Morgan Stanley; in full transparency to the board; and in relentless pursuit of value. 

 

569 Id. at 19.

570 Stillwater, 2019 WL 3943851, at *30.
102

That strategy successfully extracted two price increases totaling $18.50 per share

and a lower termination fee, and generated a final offer that the board concluded was 

fair in view of Morgan Stanley’s comprehensive valuation. Panera’s outreach to the 

only two logical buyers resulted in a deal that both the board and its advisors 

identified as fair to its stockholders. Accordingly, I find Panera’s deal process to be 

persuasive evidence of fair value.

D. Respondent Has Proven $11.56 In Synergies. 

Section 262 mandates that I determine fair value “exclusive of any element of 

value arising from the accomplishment or expectation of the merger or 

consolidation.”571 I must “exclude from any appraisal award the amount of any value 

that the selling company’s shareholders would receive because a buyer intends to 

operate the subject company, not as a stand-alone going concern, but as a part of a 

larger enterprise, from which synergistic gains can be extracted.”572 This excludes 

not only “the gains that the particular merger will produce, but also the gains that 

might be obtained from any other merger.”573 And because deal price is a persuasive 

 

571 8 Del. C. § 262(h) (“[T]he Court 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 . . . .”). 

572 Aruba, 210 A.3d at 133 (quoting Union Ill. 1995 Inv. Ltd. P’ship v. Union Fin. Grp., 

Ltd., 847 A.2d 340, 356 (Del. Ch. 2004)).

573 Id. (citing Solera, 2018 WL 3625644, at *1; Highfields Capital, Ltd. v. AXA Fin., Inc., 

939 A.2d 34, 60–64 (Del. Ch. 2007); Union Ill., 847 A.2d at 355–56).
103

metric of fair value in this case, I must also “excise[] a reasonable estimate of 

whatever share of synergy or other value the buyer expects from changes it plans to 

make to the company’s ‘going concern’ business plan that has been included in the 

purchase price as an inducement to the sale.”574 Respondent bears the burden of 

proving any downward adjustment to deal price.

Respondent contends that the Court should excise $21.56 per share from the 

deal price because it proved that JAB anticipated, and paid for, synergies from 

deploying their characteristic management framework. Respondent identifies three 

categories of such synergies: incremental cost savings, incremental leverage tax 

benefits, and revenue synergies. Petitioners generally assert that JAB is a financial 

sponsor, not a strategic buyer, and specifically challenge Respondent’s evidence of 

synergies. 

Panera’s board and financial advisors viewed JAB as a strategic buyer,

575 and 

JAB identified Panera as a strategic acquisition.576 JAB had previously acquired 

 

574 Id. (citing Solera, 2018 WL 3625644, at *1; Highfields Capital, 939 A.2d at 59–61; 

Union Ill., 847 A.2d at 343); see also DFC, 172 A.3d at 368 (recognizing that a “going 

concern” valuation requires the court to excise “any value that might be attributable to 

expected synergies by a buyer, including that share of synergy gains left with the seller as 

a part of compensating it for yielding control of the company”). 

575 Shaich Tr. 956:4–957:7; Moreton Tr. 824:3–12; Kwak Tr. 1200:18–1201:14. 

576 See JX0400 at 3–4. 
104

Einstein Bros., Caribou Coffee, and Krispy Kreme.577 JAB identified Panera as a 

“Fresh Baked / Coffee Adjacency” that would fill gaps in their portfolio by

expanding JAB’s holdings in the coffee and fresh baked lunch category.578 Even 

if JAB were not a strategic buyer, labeling them as a financial acquirer would not do 

the work Petitioners hope it would. “[I]n theory, if the acquisition of a company by 

a financial acquirer is at a market price that includes speculative elements of value 

which arise only from the merger, that acquisition value may exceed the goingconcern value.”579

 That is the case here. 

JAB has a three-pronged “playbook” that they implement after a deal closes. 

That playbook addresses people, cost and cash, and growth.580 Under the people 

prong, JAB develops a “short list of CEO candidates,” installs a “CFO and 

establish[es] Product Management Office,” assesses the “management team,” and 

deploys the “JAB ownership model.”

581

 Under their cost and cash prong, JAB 

identifies “[q]uick wins in cash, working capital (particularly AP), [and] cost 

 

577 Id. at 4. 

578 Id. at 3–4.

579 Huff Fund Inv. P’ship v. CKx, Inc., 2014 WL 2042797, at *2 (Del. Ch. 

May 19, 2014), judgment entered, (Del. Ch. June 17, 2014), aff’d, 2015 WL 631586 (Del. 

Feb. 12, 2015) (TABLE); see also Petsmart, 2017 WL 2303599, at *31 n.364 (recognizing 

“synergies financial buyers may have with target firms arising from other companies in 

their portfolio”). 

580 JX0400 at 32. 

581 Id.
105

structure” to implement a “cash and cost discipline culture.”

582

 As for growth, JAB 

conducts target-specific analyses and identifies strategic opportunities from 

combining companies under its umbrella.

583

 JAB approached Panera with the 

intention of extracting synergies through these plays. JAB’s pre-diligence model, 

setting a target price of $290.00, was based in part on value gains from implementing 

their playbook at Panera.584 

First, JAB measured the investment opportunity for its cash and cost prong, 

recognizing Panera’s lack of “discipline culture” in working capital and supply 

chain.585 JAB’s initial investment model outlined $300 million in working capital 

savings.586 JAB had successfully implemented working capital changes at Krispy 

Kreme, Caribou Coffee, and Peet’s Coffee.587 JAB planned similar changes for 

 

582 Id.

583 Id.

584 See id. at 43–44. 

585 Id. at 32, 34, 37.

586 Id. at 43.

587 JX0554 at 15 (“Cost rationalization and synergies. JAB’s plans to achieve cost 

synergies and working capital improvements could fail to materialize . . . . Mitigating 

factors: JAB has a long-track record of successful acquisitions and integration, and have 

delivered expected cost savings on recent deals including Keurig Green Mountain and 

Krispy Kreme.”); JX0589 at 19 (“Working Capital—Panera currently has ~ 4 days payable 

compared to Keurig at ~50, Caribou at >90, and Peet’s at ~ 85.”); accord Bell Tr. 1121:13–

1122:10, 1123:3–23; Hubbard Tr. 1495:8–19. 
106

Panera by increasing the Company’s days payable outstanding from about four to 

about fifty to ninety days.588 

As for cost savings opportunities, JAB identified potential savings in SG&A, 

store level efficiency, and supply chain amounting to $70 to over $100 million.589 

To accomplish this, JAB hoped to cut public company expenses, optimize franchise 

costs, introduce procurement savings, and reduce waste.

590

After performing due diligence, JAB concluded their diligence confirmed 

“significant” opportunities for cash and for cost savings.591 JAB confirmed $300 to 

$500 million by maximizing working capital, more than $30 million in procurement 

savings, $18 million in SG&A optimization, $15 million in supply chain 

optimization, and $2.5 to $5 million in public company costs.592 JAB expanded

working capital estimates as “[Panera] currently has the lowest [days payable 

outstanding] across nearly all public peers and much lower than other JAB Beech 

 

588 JX0982 at 51; accord Hubbard Tr. 1666:5–13.

589 JX0400 at 37. 

590 Id.; JX0589 at 23. 

591 See JX0593 at 49–50.

592 JX0593 at 49–50, 52–54, 78; JX0982 at 49–50; Bell Tr. 1131:12–22. Shaked agreed 

with the public company cost savings. See Shaked Tr. 368:4–16.
107

assets.”

593

 At this point, JAB recognized that they would have to pay more than their

early target price594 and raised their internal target offer from $290.00 to $305.00.595 

In addition to the management playbook, JAB applied their bedrock

negotiation playbook principle of not conditioning their deal on receiving financing 

approval, and securing financing during the diligence phase.596 Respondent noted 

that because JAB financed $3 billion for the deal, Panera would carry greater debt 

than it did as a standalone value.597 JAB quantified their anticipated debt and 

associated tax effects when they formulated their target deal price.598 

Hubbard found that “[i]nternal documents show that JAB anticipated 

significant synergies from the acquisition of Panera, and factored these synergies 

into their valuation of Panera.”

599

 Hubbard found that with increased debt, Panera 

would have higher interest tax deductions, generating a merger-specific tax synergy 

 

593 JX0593 at 49.

594 Bell Tr. 1133:9–18.

595 See JX0593 at 65. 

596 Bell Tr. 1106:21–1107:23.

597 Hubbard Tr. 1493:24–1494:7. 

598 See JX0593 at 69.

599 JX0982 at 41. 
108

of $9.18 per share.

600

 Hubbard agreed with the cost and cash synergies as well, 

finding synergies totaling $37.29 per share.

Petitioners argue that these cost savings and tax synergies are not mergerspecific synergies because Panera management could have also made these 

changes.601 In support, Petitioners cite Huff Fund Investment Partnership v. CKx, 

Inc., in which this Court found that the record contained insufficient evidence to 

support a finding that the respondent formed its bid on, or believed that there were,

merger-specific cost savings.602 

That is not true of this case. Panera’s management culture and priorities did 

not support the changes JAB intended to make. Panera was in the “habit” of paying 

its vendors within four to six days603 and invested in extensive initiatives.

604

 JAB’s 

“Cash Opportunities” arose from Panera’s failure to “focus on working capital at 

all” while spending “top dollar to get the best without ever re-engineering costs out 

 

600 Id. at 54; Hubbard Tr. 1493:24–1494:7. 

601 Petitioners’ expert testified “the company elected not to” increase its days payable 

outstanding. Shaked Tr. 451:2–8. 

602 2014 WL 2042797, at *3. The Court explained it was not “reaching the theoretical 

question of under what circumstances cost-savings may constitute synergies excludable 

from going-concern value under Section 262(h).” Id.

603 Hurst Dep. 219:4–23 (“[T]he general philosophy had been pay quickly, use that as 

leverage in some of the vendor relationships to actually get a lower price. But it ultimately 

became just the habit of Panera.”); accord Shaked Tr. 451:21–452:13. 

604 JX0984 at 42 (“Panera invested over $120 million in IT from mid-2014 through mid2017.”). 
109

of the business.”

605

 Panera forecasted cost savings, but limited its changes to 

sourcing and process improvements.606 Any overlap between Panera’s forecast and 

JAB’s playbook demonstrates differences in scale. As an example, Panera evaluated 

“FDF” and G&A savings in its forecast, predicting new cost savings between 

$300,000 and $600,000 each year from 2018–2021;607 JAB projected $18 million in 

its first year alone.608 JAB believed that it could achieve much greater savings 

because of its expertise in executing those savings across their portfolio 

companies.

609

 When Hurst saw JAB’s plan, he thought JAB had “lost their freakin’

minds based on SG&A savings.”610 JAB contemplated “Day 1 [p]laybook 

implementation.”611 

As for the tax synergies, Petitioners argue that Panera could “re-leverage its 

balance sheet as it saw fit” so the tax deductions associated with JAB’s $3 billion 

financing were not an element of value arising from the merger.612 Petitioners 

 

605 JX0400 at 37. 

606 See JX0607 at 181–85. 

607 See id. at 185. 

608 See JX0593 at 78. 

609 Bell Tr. 1122:4–1123:23; cf. JX0904 at 1. 

610 Hurst Dep. at 203:8–24 (internal quotation marks omitted). 

611 See JX0593 at 48.

612 PTO ¶ 76.
110

concede that Panera’s debt increased “dramatically” after the transaction, from $480 

million to $2.7 billion.613 Here, unlike in Huff, the evidence shows JAB had similarly 

financed other deals in the past and saw value in doing it again with Panera, while 

Panera intentionally maintained low debt.

614

 

The preponderance of the evidence demonstrates that JAB formed its bid in 

anticipation of applying its management playbook to Panera to generate mergerspecific savings. Before JAB made an offer, it recognized that it could realize 

working capital and cost savings when it ran its plays on Panera. JAB formed its 

initial offer in view of that predicted value. JAB confirmed it could realize that value 

during due diligence, and that conclusion informed their offer price. JAB predicted 

additional value in tax savings from increasing the Company’s debt through JAB’s 

characteristic financing technique. Hubbard calculated the combined value of these 

synergies at $37.29 per share.615 I find that by running its plays on Panera, JAB 

predicted $37.29 in value arising out of the merger.

Hubbard estimated that JAB built in 31% of these synergies, or $11.56, into 

the merger price.616 In support, Hubbard cites a 2013 Boston Consulting Group 

 

613 D.I. 139 at 58. 

614 JX0593 at 77 (“The company had $332.0 million of net debt in December 2016.”); 

JX0238 at 16. 

615 JX0982 at 55. 

616 Id. at 55–56.
111

study of 365 deals that analyzes the “median portion of synergies shared with the 

seller.”617 Petitioners object to the BCG study’s breadth and its lack of specificity 

across industry or comparable companies. Respondent cites Solera for the 

proposition that this study is an appropriate estimation of synergies belonging to the 

buyer.618 But the adoption of a methodology, expert opinion, or metric in one 

appraisal action does not mandate its adoption in a different appraisal action.619 This 

Court’s previous acceptance of Hubbard’s proffered study is not conclusive in this 

case. Instead, I find that Petitioners have not cast doubt on the reliability of this 

study, or put forward a more appropriate percentage. Respondent has proven 

deduction of cost and tax synergies of $11.56 per share by a preponderance of the 

evidence.620 

 

617 Solera, 2018 WL 3625644, at *28 & n.364.

618 Id. at *28 & n.364.

619 Jarden, 2019 WL 3244085, at *1 (“The appraisal exercise is, at bottom, a fact-finding 

exercise, and our courts must appreciate that, by functional imperative, the evidence, 

including expert evidence, in one appraisal case will be different from the evidence 

presented in any other appraisal case.”); accord Stillwater, 2019 WL 3943851, at *20 

(“[T]he approach that an expert espouses may have met ‘the approval of this court on prior 

occasions,’ but may be rejected in a later case if not presented persuasively or if ‘the 

relevant professional community has mined additional data and pondered the reliability of 

past practice and come, by a healthy weight of reasoned opinion, to believe that a different 

practice should become the norm . . . .’” (quoting Golden Telecom Trial, 993 A.2d at 517)). 

620 Petitioners argue that the Court should not agree with Hubbard’s analysis because he 

“ignores the negative synergies, or costs, that resulted from the acquisition.” D.I. 140 at 

81. Petitioners have not shown that JAB failed to consider these costs when JAB evaluated 
112

I turn now to JAB’s third playbook prong of growth, in which Respondent 

sees revenue synergies. Unlike the cost and cash playbook prongs, JAB did not 

quantify these growth opportunities in its models. JAB recognized that while it is 

“relatively simplistic to quantify potential cost savings[,] [i]t’s much more difficult 

to quantify for-sure growth areas, even though they may be extremely important.”

621

 

Leading up to and throughout trial, Respondent and its expert presented a fair value

that did not quantify any revenue synergies attributable to JAB’s growth 

opportunities. This is consistent with the record evidence and both parties’ experts’

opinions. 

In their pre-diligence model, JAB identified growth opportunities for coffee, 

technology, international expansion, and CPG.

622

 At a March 31 meeting, Panera 

also identified opportunities in international franchising, CPG (including coffee), 

and technology.623 After this meeting, on April 2, JAB created its post-diligence 

model, expressly clarifying that CPG, coffee, and international expansion were

 

their implementation of their playbook, calculated Panera’s resulting value, or formed their 

offer price. I do not find that this undermines Hubbard’s synergy analysis. 

621 Bell Tr. 1127:13–21. 

622 See JX0400 at 38–41. Possible plans included leveraging Panera’s technology platform 

across JAB’s portfolio, enhancing Panera’s in-store coffee program, focusing on CPG, 

increasing K-cup sales, and expanding internationally. Id. at 32.

623 See JX0564 at 131, 141–152, 154–158. 
113

“Growth Areas Not in [the] Investment Model[.]”624 In this same model, as 

explained, JAB increased its internal target price to $305.00 based on quantified 

anticipated cost savings.625 

At an April 3 meeting, the parties again discussed opportunities for CPG, 

coffee, international expansion, technology, as well as marketing, real estate, food 

sourcing, and franchising.626 Bell testified that these strategic growth opportunities 

played a role in JAB’s decision to increase their offer from $305.00 to $315.00627

because JAB

did some back-of-the-envelope math and got excited about 

it. But since we had no discussion with anyone about it, 

and it was a short period of time, we didn’t, quote/unquote, 

put it in the model, financially. But I will tell you—you 

even heard it earlier—coffee was core to our strategy of 

doing this. It’s just something that was difficult for us to 

quantify at the time we were doing diligence.628 

 

624 See JX0593 at 57–62. Although JAB had developed a “coffee procurement savings 

program,” they did not include these synergies in the post-diligence model. Id. at 60–61; 

accord Bell Tr. 1123:3–1126:19, 1129:2–24. 

625 See JX0593 at 65.

626 See JX0607 at 145, 155–169, 171–175, 229. 

627 See Bell Tr. 1135:1–10 (“Q. And when you went higher, to 315, did those strategic 

opportunities or synergies play a role in the decision to raise your offer from 305 to 315? 

A. I would say they did, because, you know, again, as a long-term holder, we ended up for 

this one going to a price that was below . . . a return. That we priced into a return that was 

below what we initially thought we would have to do. But we took a big leap of faith on 

these strategic opportunities, which we didn’t quantify in the model.”). 

628 Id. 1129:5–24. 
114

Bell testified that JAB took a “leap of faith” on these “strategic opportunities,” and 

justified the $10.00 increase with their “back-of-the-envelope” calculations.629 

Later, Bell testified that coffee procurement was not a “back-of-the-envelope”

calculation because JAB “hadn’t done the analysis.”630

After trial, Respondent latched onto a new synergy theory that deducted 

$10.00 per share for these growth or revenue synergies. Respondent’s post-trial 

position finds no support from its expert. Hubbard did not include any revenue 

synergies in his analysis.631 When pressed, Hubbard affirmatively declined to adopt 

Bell’s testimony, as he saw no support for it in the trial exhibits or in his work for 

Respondent.

632

 “Thus, in its zeal to reach a desired litigation outcome, Respondent 

finds itself in the awkward position of advancing a position at odds with its own 

expert . . . .”633 At post-trial argument, Respondent’s counsel explained that they 

“never asked [Hubbard] to adjust his opinion” because the trial strategy required 

 

629 Id. 1132:5–21; 1134:19–1135:10. 

630 Id. 1168:8–21 (“Q. Coffee procurement, was that one of the ones that was on the back 

of the envelope? A. I don’t even think it was that, because we hadn’t done the analysis.”).

631 See JX0982 at 55–56; accord Hubbard Tr. 1593:17–1594:3, 1694:22–1695:8. 

632 Hubbard Tr. 1482:18–24, 1663:6–14, 1664:20–24, 1665:24–1666:4. 

633 Manichaean Capital, LLC v. SourceHOV, C.A. No. 2017-0673-JRS, at 54 (Del. Ch. 

Jan. 30, 2020). 
115

Hubbard to stick with his synergy analysis, leaving counsel to argue the additional 

$10.00 in synergies in post-trial briefing.634 

This series of events casts doubt over Respondent’s post-trial position on 

revenue synergies. At bottom, Respondent puts forward conclusory fact testimony 

contradicted by JAB’s contemporaneous financial modeling and rejected by its 

expert. There is no evidence that JAB quantified revenue synergies. JAB’s financial 

modeling assumes the opposite: “no uplift . . . from any strategic synergy 

opportunities.”635 JAB’s contemplation of potential growth opportunities is 

insufficient to prove ten dollars’ worth of revenue synergies in JAB’s best and final 

offer price. Further, JAB provided no evidence to support the conclusion that all ten 

dollars inured to JAB’s benefit and should be excised from the amount paid to 

stockholders. Hubbard did not find any revenue synergies, and therefore did not 

apportion any. Respondent has failed to prove revenue synergies that would support 

an excise of $10.00 from the deal price. In all, Respondent has proven $11.56 from 

its cost savings and tax synergies. The deal price minus synergies valuation method 

yields a price per share of $303.44.

 

634 D.I. 154 at 117:21–120:13 (“We never asked him to adjust his opinion. . . . And, you 

know, frankly, Your Honor, that’s a trial strategy decision that I made, right? These are 

the sort of things that we do. And I still think that we have a strong record evidence for 

this $10.”). 

635 JX0593 at 64. 
116

E. The Supplied Alternative Valuation Methodologies Are 

Unreliable. 

While Respondent asserts that deal price minus synergies deserves dispositive 

weight, Petitioners press three alternative valuation methodologies: discounted cash 

flow (“DCF”), comparable companies, and precedent transactions.636 In the context 

of a persuasive deal price, I disregard those methodologies for the reasons that 

follow. 

1. Petitioners have not proven their DCF model’s reliability.

“While the particular assumptions underlying its application may always be 

challenged in any particular case, the validity of [the DCF] technique qua valuation 

methodology is no longer open to question.”637 Nevertheless, the Supreme Court 

“cautioned against using the DCF methodology when market-based indicators are 

 

636 Neither party argues in favor of the unaffected stock price. 

637 Pinson, 1989 WL 17438, at *8 n.11. “The DCF model entails three basic components: 

an estimation of net cash flows that the firm will generate and when, over some period; a 

terminal or residual value equal to the future value, as of the end of the projection period, 

of the firm’s cash flows beyond the projection period; and finally a cost of capital with 

which to discount to a present value both the projected net cash flows and the estimated 

terminal or residual value.” Cede & Co. v. Technicolor, Inc., 1990 WL 161084, at *7 (Del. 

Ch. Oct. 19, 1990).
117

available.”638 Compared to a persuasive, market-based deal price metric, “the DCF 

technique ‘is necessarily a second-best method to derive value.’”639 

Petitioners and Respondent each introduced a DCF valuation prepared by 

their expert. Hubbard introduced a DCF that generated a value of $291.71 per 

share.

640

 He gave his DCF no independent weight, but viewed it solely as 

corroborative of his deal-price-minus-synergies value of $303.44.641 

In a “very subjective” weighting exercise, Shaked gave sixty percent weight 

to his DCF model, which generated a value of $354.00 per share, exceeding the deal 

price by $39.00.642 By this model, Shaked asserted over a billion dollars was left on 

the table.643 The experts are approximately $63.00 per share apart. Because 

Petitioners are urging the Court to give significant weight to Shaked’s DCF model, 

they bear the burden of convincing the Court that the model is sufficiently reliable 

to merit weight in the face of Panera’s reliable deal process.

 

638 Stillwater, 2019 WL 3943851, at *60 (citing Dell, 177 A.3d at 37–38, and DFC, 172 

A.3d at 369–370, 369 n.118). 

639 Id. at *61 (quoting Union Ill., 847 A.2d at 359).

640 JX0982 at 84.

641 As explained, Hubbard did not accept Respondent’s post-trial market value of $293.44.

642 Shaked Tr. 179:12–181:12, 239:24–241:17.

643 Hubbard Tr. 1483:15–1584:11. 
118

Petitioners have fallen short: Shaked’s model as presented at trial is of 

questionable reliability. The primary flaw is Shaked’s concession regarding the 

investment rate for the terminal period. In his report, he put forward an investment 

rate of 3.1% that he “conservative[ly]” cushioned with a $116 million buffer, as 

“kind of an extra slack for the maintenance.”644 

Hubbard put forward a 35.6% investment rate.645 This rate was based on the 

principle that “growth isn’t free,”646 particularly in the extraordinarily competitive 

restaurant industry.647 He anchored his investment rate in Panera’s historical 

investment rate,648 and utilized the formula IR=g/RONIC, where the investment rate 

equals the terminal growth rate over the return on new invested capital.649 Hubbard 

set RONIC equal to the weighted average cost of capital (“WACC”) on the premise 

that “[i]n a competitive industry, abnormal profits tend to vanish over time.”650 In 

 

644 Shaked Tr. 203:9–19 (explaining the reason for the buffer as a hypothetical: “let’s 

assume that in my terminal year, the maintenance will be 259, not 143. This is 81 percent 

increase compared to what it used to be. Last year is 143, and I assume that it will be 259. 

So I build in $116 million, kind of an extra slack for the maintenance”). 

645 JX0982 at 95–96. 

646 D.I. 141 at 67 (citing Hubbard Tr. 1536:22–1537:7).

647 Id. (citing JX0982 at 14–20; Goldin Tr. 1409:22–1411:24). 

648 See id. at 68 (citing Hubbard Tr. 1546:17–1547:6; 1687:7–19). 

649 JX0982 at 96. 

650 Id. 
119

Respondent’s view, Shaked’s original investment rate assumed “startlingly high 

returns on ROIC [([return on invested capital)] forever.”651 

When Shaked took the stand at trial, he addressed this criticism by presenting 

for the first time a “corrected” ROIC chart with an investment rate that diverged 

from, and was significantly higher than, the investment rate in his report.

652

 Shaked 

did not base his “corrected” chart on the analysis found in his report or mentioned 

in his deposition. Notwithstanding this correction, Shaked did not adjust his DCF 

with the “corrected” investment rate. 

When Hubbard applied Shaked’s corrected investment rate to his other DCF 

inputs, he found “the valuation attached to this [investment rate] is $100 off the one 

he is tendering.”653 Hubbard testified that if Shaked were to plug his corrected 33% 

investment rate into his DCF, this would erase much of the difference between the 

experts’ DCF calculations.654

After Hubbard’s testimony, Shaked took the stand as a rebuttal witness, but 

did not address his failure to adjust his DCF in light of his corrected investment 

 

651 See D.I. 141 at 63. 

652 Shaked Direct Demonstrative Deck at 148 (“Assumed Panera will be using 2/3 of its 

net income to pay out dividends and/or repurchase shares, and will have 1/3 of it flow to 

retained earnings (grow book value of equity).”); see Hubbard Tr. 1571:21–1572:18.

653 Hubbard Tr. 1571:21–1572:18. 

654 See id. 1570:9–1571:15. 
120

rate.655 Shaked’s trial concession on his investment rate weakens his credibility: he 

abandoned the rate in his report after learning of Hubbard’s criticisms, but stood by 

his DCF reliant on that rate, even after Hubbard pointed out the inconsistency. 

Shaked’s original, unadjusted investment rate is a significant driver of his 

DCF model. Hubbard pointed to this aspect of Shaked’s model to explain the wild 

swings in value when substituting different perpetuity growth rate (“PGR”) inputs. 

Under Shaked’s initial model, inputting the different growth rates from bankersupplied DCFs creates outputs that are $1.3 billion apart.

656

 This sensitivity to PGR

arises because Shaked initially assumed such a low investment rate while predicting 

outsized growth.657 Because “the perpetuity growth rate and the investment rate are

linked,” changing the PGR in Shaked’s original model would cause “a very large 

swing in his DCF value.”658 Shaked described his model’s sensitivity to PGR based 

on his low investment rate as a “built-in problem.”659 Given the significant impact 

of Shaked’s initial investment rate on his DCF, his concession on that input and 

failure to adjust the model introduces fatal unreliability. 

 

655 See Shaked Tr. 1699:14–1742:7.

656 See id. 486:5–18. 

657 See Hubbard Tr. 1536:3–21. 

658 Id. 1572:19–1574:6. 

659 Shaked Tr. 311:11–312:8.
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Above, I determined that the market guides my analysis of this transaction. 

The Supreme Court has “cautioned against using the DCF methodology when 

market-based indicators are available.”660 Shaked’s shift in his investment rate, the 

fact that he did not adjust his DCF to accommodate that shift, and the significance 

of his original investment rate to the output of his DCF render his model unreliable. 

Petitioners have failed to carry their burden to establish that Shaked’s DCF model is 

a sufficiently reliable indicator, particularly in the shadow of a reliable market-based 

deal price. I do not attribute any weight to this metric.661 

2. There is not a suitable peer group for a reliable 

comparative companies analysis. 

“[B]efore a comparable companies multiples analysis can be undertaken with 

any measure of reliability, it is necessary to establish a suitable peer group through 

appropriate empirical analysis.”662 “If, and only if, a proper peer set can be selected, 

the next step in the comparable companies analysis is to select an appropriate 

multiple and then determine where on the distribution of peers the target company 

falls.”663 Where the experts’ identified companies are “too divergent from [the 

 

660 See Dell, 177 A.3d at 37–38; DFC, 172 A.3d at 369–370, 369 n.118. 

661 See Solera, 2018 WL 3625644, at *29 (citing Union Ill., 847 A.2d at 359); id. at *32.

662 Jarden, 2019 WL 3244085, at *32. 

663 Id. at *33.
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company] in terms of size, public status, and products, to form meaningful analogs 

for valuation purposes,”664 this Court will disregard this valuation metric.665 

The parties dispute the relevant peer group and argue that neither expert tested

the reasonableness of the comparable companies selected. Hubbard selected 

comparable companies by reviewing equity analysts’ reports in the year before the 

merger date and selecting the firms mentioned by three or more analysts at least 

once.666 As a result, Hubbard included companies that operate outside the fast casual 

segment, including full-service restaurants like Brinker International, Darden 

Restaurants, Texas Roadhouse, and The Cheesecake Factory.667 Hubbard found this 

analysis produced fair values ranging from $218.58 to $310.99668; he did not afford 

any weight to his comparable companies analysis, but viewed it as corroborative of 

deal price.

669 Petitioners question Hubbard’s peer group as it includes much smaller 

 

664 Hoyd v. Trussway Hldgs., LLC, 2019 WL 994048, at *5 (Del. Ch. Feb. 28, 2019). 

665 See Merion Capital, L.P. v. 3M Cogent, Inc., 2013 WL 3793896, at *5 (Del. Ch. 

July 8, 2013) (“[W]hen the ‘comparables’ involve companies that offer different products 

or services, are at a different stage in their growth cycle, or have vastly different multiples, 

a comparable companies or comparable transactions analysis is inappropriate.”).

666 JX0982 at 115. 

667 Hubbard Dep. 360:5–361:23.

668 JX0982 at 12–13, 120–21. 

669 Id. at 123. 
123

companies, including sectors other than fast casual, and does not widely overlap with 

the comparable companies the bankers identified. 

Meanwhile, Respondent highlights that weakness in Shaked’s metric. Shaked 

used a peer group identified by at least 75% of bankers involved.670 These results 

exclude all of the fast casual companies the bankers contemporaneously identified, 

except for Chipotle.671 It also included and excluded similarly situated companies. 

For example, Shaked included McDonald’s and Burger King, but excluded 

Wendy’s; he included Domino’s, but excluded Papa John’s.672 Shaked found this 

approach resulted in fair values falling between $377.00 and $382.00 per share; he 

weighed this valuation at 30%.673

Where an expert defers to a peer set without conducting a “meaningful, 

independent assessment of comparability” between the seller’s business and the 

business of its peer companies it “is not useful and, frankly, not credible.”674 Neither 

expert presents a reliable empirical analysis to show a suitable peer group; both sets 

have material weaknesses. For that reason, I do not find comparable companies as 

a fair measure of value. Instead, I view both parties’ comparable companies analyses

 

670 Shaked Tr. 439:23–440:18. 

671 Compare JX0983 at 150–51, with JX0554 at 44, and JX0589 at 39, and JX0826 at 37.

672 See Shaked Tr. 441:9–14, 439:16–22. 

673 JX0983 at 59–61.

674 Jarden, 2019 WL 3244085, at *34.
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as an attempt to corroborate their preferred valuation. I decline to afford them any 

weight. 

3. There are insufficient comparable precedent transactions 

to generate a reliable valuation metric. 

Both parties’ experts performed a precedent transaction analysis.675 Hubbard 

selected precedent transactions by reviewing eleven transactions that Morgan 

Stanley included in its April 4, 2017 presentation to the board.676 He “calculated 

valuations that are corroborative using multiples of EV/EBITDA based on . . . 

precedent transactions” that led to a price per share range of $143.58 to $236.22.677 

Hubbard used this data point as corroborative and gave it no weight678 because a 

precedent transaction analysis is “model-based” while “the market evidence is the 

real world.”679 

Shaked conducted a precedent transaction analysis by using data from the 

FactSet database filtered by acquisitions of restaurant companies in the United States 

or Canada with an enterprise value over $1 billion.680 He then compared Panera’s 

 

675 See JX0982 at 121–22; JX1023; JX0983 at 59–60. 

676 JX0982 at 121. 

677 See id. at 123. 

678 See id. 

679 Hubbard Tr. 1481:13–23. 

680 JX0983 at 59. 
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forecasted revenue growth to the upper quartile EBITDA multiples of three 

comparative transactions and conducted an analysis that led to a price per share range 

of $338.00 to $361.00 with a midpoint of $350.00 per share.681 Even though Shaked 

explained at trial that he “was not really very thrilled with getting only three 

transactions[,]”682 he still afforded it 10% weight. 

The accuracy of these analyses depends, as with a comparable companies

analysis, on the closeness of the comparable transaction. As Morgan Stanley 

recognized, there was not a “particular transaction that should serve as a direct 

comparable.”683 I find that neither sample size is reliable enough to afford it weight. 

F. Respondent Is Not Entitled To A Refund Of Its Prepayment. 

I turn now to the relief sought. The Company prepaid Dissenting 

Stockholders the full deal price, or $315.00 per share. Petitioners have obtained 

more than fair value, which I have found to be $303.44. The Company seeks a 

refund in the amount of the deducted synergies, or the difference between fair value 

and prepayment, plus interest on that amount. Petitioners and Respondent did not 

agree to a clawback provision in the event Respondent overpaid. Respondent cites 

no support for its request. Like others who have thought about this issue, including 

 

681 Id. at 59–60. 

682 Shaked Tr. 255:4–17; see also id. 180:24–181:12. 

683 Kwak Tr. 1210:8–1211:6.
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counsel’s firm, I find the request for a refund has no present basis in Delaware’s 

appraisal statute.684

Under Section 262(h), a surviving corporation seeking to lessen the significant 

amount of interest that can otherwise accrue in an appraisal action can prepay 

petitioning stockholders “an amount in cash.”

685

 As the General Assembly 

explained, “[t]here is no requirement or inference that the amount so paid by the 

surviving corporation is equal to, greater than, or less than the fair value of the shares 

to be appraised.”686 Upon prepayment, interest accrues only upon the sum of the 

difference between the amount prepaid and the judicially determined fair value, and 

any interest accrued to date unless paid at that time.687 Section 262 does not 

 

684 See generally Charles K. Korsmo & Minor Myers, Interest in Appraisal, 42 J. Corp. L. 

109 (2016); R. Garrett Rice, Give Me Back My Money: A Proposed Amendment to 

Delaware’s Prepayment System in Statutory Appraisal Cases, 73 Bus. Law 1051 (2018); 

Abigail Pickering Bomba et al., Proposed Appraisal Statute Amendments Would Permit 

Companies To Reduce Their Interest Cost—Likely To Discourage “Weaker” Appraisal 

Claims And Make Settlement Of “Stronger Claims” Harder, Fried Frank M&A Briefing 

(Mar. 23, 2015), https://www.friedfrank.com/siteFiles/Publications/FINAL%20-%203-

23-2015%20-%20Proposed%20Appraisal%20Statute%20Amendments.pdf; Arthur R. 

Bookout et al., Delaware Appraisal Actions: When Does It Make Sense to Prepay?, 

Skadden, Arps, Slate, Meagher & Flom LLP (May 29, 2018), 

https://www.skadden.com/insights/publications/2018/05/insights-the-delawareedition/delaware-appraisal-actions.

685 8 Del. C. § 262(h).

686 Del. H.B. 371, 148th Gen. Assem., 80 Del. Laws, ch. 265, §§ 8–11 (2016).

687 8 Del. C. § 262(h).
127

explicitly contemplate any refund. Accordingly, appraisal litigants sometimes

stipulate to a clawback provision in their prepayment agreement.688 

“Under Delaware law, the appraisal remedy is entirely a creature of statute.”689 

“The goal of statutory construction is to determine and give effect to legislative 

intent.”690 “The courts may not engraft upon a statute language which has been 

clearly excluded therefrom by the Legislature.”691 “[S]uch action would place the 

court in a position of making law.”692 Nor may this Court “assume that the omission 

was the result of an oversight on the part of the General Assembly.”693 Where, as 

with Section 262, “a statute is silent on a particular matter, the otherwise detailed 

nature of the statute in other respects can be significant.”694 “[I]n drafting Section 

 

688 E.g., Artic Invs. LLC v. Medivation, Inc., C.A. No. 2017-0009-JRS, D.I. 20 at 5 (Del. 

Ch. Mar. 6, 2016) (stipulating for clawback rights if the prepayment amount were to exceed 

the Court’s fair value determination of the appraisal shares along with any accrued 

interest); see Rice, supra note 684, at 1082 (recognizing that petitioners sometimes 

stipulate to clawbacks).

689 Ala. By-Prods. Corp. v. Cede & Co. ex rel. Shearson Lehman Bros., 657 A.2d 254, 258 

(Del. 1995) (citation and internal quotations omitted).

690 One-Pie Invs., LLC v. Jackson, 43 A.3d 911, 914 (Del. 2012) (quoting LeVan v. Indep. 

Mall, Inc., 940 A.2d 929, 932 (Del. 2007)). 

691 Giuricich v. Emtrol Corp., 449 A.2d 232, 238 (Del. 1982).

692 Goldstein v. Mun. Court for City of Wilm., 1991 WL 53830, at *5 (Del. Super. 

Jan. 7, 1991) (citing State v. Rose, 132 A. 864, 867 (Del. Super. 1926)).

693 Giuricich, 449 A.2d at 238.

694 Terex Corp. v. S. Track & Pump, Inc., 117 A.3d 537, 544 (Del. 2015), as 

revised (June 16, 2015).
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262(h), the General Assembly made a determination as to the proper balance of the 

competing interests of appraisal petitioners, who have been cashed out of their 

preferred investment and denied the ability to invest the merger consideration in the 

market pending outcome of the case, and respondents, against whom too large an 

interest award may operate as a penalty.”695

Here, the only permissible conclusion is fortunately a logical one: the General 

Assembly intended to omit a refund mechanism. In 2016, the General Assembly 

enacted an optional and scalable prepayment scheme without mention of a refund. 

It did so in the shadow of the Model Business Corporation Act (the “Model Act”), 

adopted by the majority of other states, which is a mandatory and fixed prepayment 

scheme: it mandates prepayment of what the corporation believes is fair value to 

stockholders who purchased their stock before the merger was announced, and 

permits it for stock acquired after the merger announcement.696 Other amendments 

to Section 262 have tracked the Model Act, evidencing a legislative awareness of its 

content.697 The Model Act is silent on the effects of overpayment, like Section 262,

 

695 Huff Fund Inv. P’ship v. CKx, Inc., 2014 WL 545958, at *3 (Del. Ch. Feb. 12, 2014).

696 Model Bus. Corp. Act § 13.24(a) (2016).

697 Compare Del. H.B. 160, 144th Gen. Assem., 76 Del. Laws, ch. 145 §§ 13, 16 (2007), 

and 8 Del. C. § 262(h), with Model Bus. Corp. Act § 13.01 (adopting the legal rate as the 

applicable interest rate for dissenting stockholders). 
129

and has been interpreted to allow petitioning stockholders to keep any 

overpayment.698 

Commentators have also interpreted Section 262’s silence as an indication 

that overpayment is not recoverable.

699 This Court has not yet resolved the issue.700

I conclude Section 262 does not explicitly provide for a refund, and that therefore I 

cannot order one. I am not the first to conclude that the Court must stay within the 

bounds of Section 262’s plain language. In 1948, the Delaware Supreme Court 

concluded that because the operative version of Section 262 did not provide for 

interest, the judiciary could not award it.701 More recently, before the prepayment 

provision was enacted, Vice Chancellor Glasscock found he was unable to order 

 

698 See Model Bus. Corp. Act § 13.30(e); see also Rice, supra note 684, at 184–86; Mary 

Siegel, An Appraisal of the Model Business Corporation Act’s Appraisal Rights 

Provisions, 74 Law & Contemp. Probs. 231, 236 (2011) (“[I]f the corporation’s estimate 

of fair value is greater than the amount ultimately determined by the court, the corporation 

will have paid this greater amount to the shareholder without any statutory right to require 

the shareholder to return the difference between the court’s determination of fair value and 

the corporation’s estimate of fair value.” (footnote omitted)). 

699 See Korsmo & Meyers, supra note 864, at 125; Bookout et al., supra note 864. 

700 In Artic Investments LLC v. Medication, Inc., the company argued under an unjust 

enrichment theory that the Court should find the corporation entitled to a refund for 

overpayment after trial. See C.A. No. 2017-0009-JRS, D.I. 15 at 24 (Del. Ch. Mar. 28, 

2017). The Court did not resolve this issue, or grant the party’s proposed stipulation for a 

clawback provision, before the parties stipulated to dismissal. See id. D.I. 23 (Del. Ch. 

Mar. 6, 2018). 

701 Meade v. Pac. Gamble Robinson Co., 58 A.2d 415, 417–18 (Del. 1948). 
130

prepayment.702 After those exercises in judicial restraint, amendments in the statute 

soon followed.703 I will not encroach on the General Assembly’s prerogative.704

III. CONCLUSION

For the reasons discussed above, I find the fair value of the Company’s 

common stock at time of the merger was $303.44, calculated as deal price minus 

synergies. Respondent chose to prepay the $315.00 deal price to the Dissenting 

Stockholders. Because Respondent is not entitled to a refund of the difference 

between $315.00 and $303.44, Petitioners have received more than fair value. The 

parties shall submit a stipulated implementing order. 

 

702 See Huff, 2014 WL 545958 at *3. 

703 See 47 Del. Laws ch. 136, § 7 (1949) (affording the Court the power to award interest); 

Del. H.B. 371, 148th Gen. Assem., 80 Del. Laws, ch. 265, §§ 8–11 (2016) (creating the 

possibility of prepayment).

704 “[T]he expression of dictum is ordinarily to be avoided.” State ex rel. Smith v. Carey, 

112 A.2d 26, 28 (Del. 1955). Accordingly, I note only that refraining from awarding a 

refund here does not offend my sensibilities. A refund is not available under the Model 

Act, which tethers the mandatory prepayment amount to the corporation’s position on fair 

value, and therefore gives the prepayment amount significance in the litigation context. 

Under the DGCL, prepayment is optional, and a corporation can pay any amount it chooses 

without making a commitment to fair value. Prepayment under the DGCL is a business 

decision, made with knowledge of the company’s sale process that is superior to the 

stockholder’s, and with counsel’s prediction of how long the litigation may take and how 

much interest may accrue. In my view, expressed in dictum, the case for a refund under 

the DGCL is less compelling than under the Model Act, which does not provide for one.