IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

LONGPATH CAPITAL, LLC, 

a Delaware limited liability company,

Petitioner, 

v.

RAMTRON INTERNATIONAL 

CORPORATION, a Delaware corporation,

Respondent.

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 C.A. No. 8094-VCP

MEMORANDUM OPINION

Date Submitted: March 3, 2015

Date Decided: June 30, 2015

David A. Jenkins, Esq., Laurence V. Cronin, Esq., SMITH, KATZENSTEIN & 

JENKINS LLP, Wilmington, Delaware; Attorneys for Petitioner.

A. Thompson Bayliss, Esq., Sara E. Hickie, Esq., ABRAMS & BAYLISS LLP, 

Wilmington, Delaware; Attorneys for Respondent.

PARSONS, Vice Chancellor.
1

In this appraisal action, the petitioner asks the Court to determine the fair value of 

its shares in the respondent. On November 10, 2012, a third party acquired the 

respondent in a hostile cash merger for $3.10 per share. The deal had an equity value of 

approximately $110 million and paid a 71% premium over the respondent‘s unaffected 

stock price of $1.81. 

The petitioner acquired its shares after the announcement of the merger and 

demanded appraisal pursuant to 8 Del. C. § 262. The respondent contends the merger 

price less synergies offers the most reliable measure of the fair value of its shares. That 

methodology, as applied by the respondent‘s expert, yields a value of $2.76 per share. 

The petitioner‘s expert, relying on a combination of a discounted cash flow (―DCF‖)

analysis and a comparable transactions analysis, contends that the fair value is $4.96 per 

share.

For the reasons that follow, I conclude that a DCF analysis is not an appropriate 

method of determining fair value in this instance. The utility of a DCF ceases when its 

inputs are unreliable; and, in this instance, I conclude that the management projections 

that provide the key inputs to the petitioner‘s DCF analysis are not reliable. The parties 

agree that there are no comparable companies. The petitioner relies, in part, upon a 

comparable transactions approach, but I conclude that his two-observation data set does 

not provide a reasonable basis to determine fair value. Although the petitioner

thoroughly disputes this point, I conclude that the sales process in this instance was 

thorough and that the transaction price less synergies provides the most reliable method 
2

of determining the fair value of the petitioner‘s shares. The respondent, however, has not 

shown that the synergies in fact amounted to $0.34 per share, as it claims. Instead, I 

adopt the petitioner‘s estimate of $0.03 per share in synergies, resulting in a fair value of 

$3.07 per share. 

I. BACKGROUND

I begin by providing a brief overview of the parties, the respondent and its 

business, and the process leading up to the merger.1 I delve more deeply into several of 

these and related topics in subsequent Sections.

A. The Parties

Petitioner, LongPath Capital, LLC (―LongPath‖), is an investment vehicle that 

began acquiring shares of the respondent in mid-October 2012, about a month after the 

announcement of the merger.2 Overall, LongPath timely demanded and perfected its 

appraisal rights as to 484,700 shares of common stock in the respondent.3

Respondent, Ramtron International Corporation (―Ramtron‖ or the ―Company‖), is 

a fabless semiconductor company that produces F-RAM. A ―fabless‖ semiconductor 

company is one that does not manufacture the silicon wafers used in its products, but 

 

1

The factual record is drawn, in part, from the testimony presented at trial. 

Citations to such testimony are in the form ―Tr. # (X)‖ with ―X‖ representing the 

surname of the speaker, if not clear from the text. Exhibits will be cited as ―JX #‖ 

and facts drawn from the parties‘ pre-trial Joint Stipulation are cited as ―JS ¶ #.‖ 

2

Tr. 10 (Davidian). 

3

JS ¶ 1.
3

instead, outsources that task to a separate company known as a ―fab‖ or a ―foundry.‖4 

RAM stands for random access memory, a ubiquitous component of computers. F-RAM 

is ferroelectric RAM.5 The benefits of F-RAM are that it has fast read and write speeds, 

can be written to a high number of times, and consumes low power.6 Importantly, FRAM will retain memory when power is lost.7

Nonparty Cypress Semiconductor Corporation (―Cypress‖) issued a bear hug letter 

to Ramtron on June 12, 2012, offering to buy all of its shares for $2.48 per share.

8

 After 

Ramtron‘s board rejected the offer as inadequate, Cypress initiated a hostile tender offer 

on June 21, 2012, at $2.68 per share.9 Ramtron and Cypress eventually reached an 

agreement on a transaction price of $3.10 per share and signed a merger agreement on 

September 18, 2012.10 Following a subsequent tender offer—apparently in an 

unsuccessful effort to acquire 90% or more of the outstanding stock or at least solidify 

 

4

Id. ¶ 4.

5

Tr. 184 (Davenport).

6

JS ¶ 2.

7

Tr. 281 (Rodgers).

8

JS ¶ 11.

9

Id. ¶ 13.

10 Id. ¶ 18.
4

Cypress‘ stock holdings—and a stockholder vote, the long-form merger closed on 

November 20, 2012 (the ―Merger‖).

11

B. Ramtron’s Operative Reality

Throughout this litigation, Respondent has portrayed Ramtron as a struggling 

company unlikely to be able to continue as a business had the transaction with Cypress 

not concluded successfully. Petitioner, by contrast, describes Ramtron as a company 

with strong patent and intellectual property protection of its core products, a successful 

new management team, and excellent business prospects. Indeed, in relying on the 

management projections, Petitioner characterizes Ramtron as a company on the verge of 

taking off like a rocket. Perhaps unsurprisingly, I find that Ramtron‘s operative reality at 

the time of the Merger was somewhere in between these practically polar opposite 

characterizations. 

1. Ramtron’s foundry situation

As a fabless semiconductor company, Ramtron‘s relationships with its foundries

were vitally important. Indeed, Ramtron depended on its foundry to manufacture its 

products. At the time of the Merger, Ramtron‘s primary foundry was Texas Instruments 

(―TI‖).12 Ramtron‘s contract with TI provided that, if TI decided to terminate the 

contract, it would have to provide three additional years of products to Ramtron. By 

 

11 Id. ¶ 23.

12 Id. ¶ 5.
5

contrast, in the event of a change-in-control transaction at Ramtron, TI could stop 

providing foundry services after only ninety days.13 

Semiconductor foundries were the subject of a substantial amount of testimony at 

trial. As will be seen, the subject of foundries relates to both the reliability of the 

management predictions and the disputed cause of Ramtron‘s poor performance in 2012. 

Gery Richards, Ramtron‘s CFO at the time of the Merger,

14 testified that Fujitsu 

previously served as the Company‘s primary foundry. In 2009, Fujitsu gave Ramtron a 

―last-time buy‖ notice under the relevant contract, indicating that Fujitsu intended to 

terminate its foundry relationship with Ramtron in two years.15

The testimony at trial made clear that transitioning foundries is not a simple 

process. Semiconductors are complex products. In fact, even the silicon wafers from 

which the semiconductors are created are not commodities but instead vary by 

company.

16

 Additionally, each foundry‘s technology differs and F-RAM, being a 

relatively unique product, complicates the process further. Thus, transitioning to a new 

 

13 JX 322, JX 324.

14 Before assuming the CFO position, Richards previously had served as the 

Company‘s controller. He appears to have started working at Ramtron in 2004. 

Tr. 49. After the Merger, he worked for Cypress for five months until March 

2013. Id. at 22-23. 

15 Id. at 48-49. Apparently Fujitsu did not definitively terminate the foundry 

relationship, but instead, was moving its plant to a new location and Ramtron 

determined that the expense of transitioning to the new location outweighed the 

benefits.

16 Id. at 291 (Rodgers).
6

foundry requires understanding the foundry‘s manufacturing technology and how it 

interacts with the semiconductors as designed, then modifying the product design to 

eliminate any resulting errors, then completing several rounds of product testing followed 

by further design modifications to eliminate any previously undiscovered errors, and then 

allowing the customers to evaluate the product before finally moving to full-scale 

production.17 Unlike, for example, consumer RAM that one could purchase at an 

electronics store for a PC and then, depending on the model, simply ―plug and play,‖ 

Ramtron‘s F-RAM often was designed into the product being created by another 

manufacturer, thus inhibiting Ramtron‘s ability to unilaterally change its products in any 

significant way. According to T.J. Rodgers, the CEO of Cypress, even for a 

noncontroversial shift of ―going to a different foundry, to change one of your products, 

you‘re looking at two years plus.‖18

In fact, Ramtron‘s own track record of foundry transitions suggests that two years 

probably is a significant underestimate. When Fujitsu gave Ramtron a last-time buy 

notice in 2009, Ramtron already had been attempting to develop a second foundry 

relationship with TI. The effort of transitioning to TI had begun in 2004 and took seven 

 

17 Id. at 291-92 (describing the process of transitioning foundries). The Company‘s 

products primarily, if not entirely, were for commercial customers. The F-RAM 

often was ―designed into‖ the customer‘s end product.

18 Id. at 292. Rodgers also suggested that Ramtron‘s products had design flaws that 

increased the difficulty of transitioning. 
7

years to complete.19 That transition was not smooth, resulting in product shortages that 

caused Ramtron to place its customers on allocation.20 Despite the difficulty of 

transitioning from Fujitsu to TI, Ramtron succeeded, eventually, in obtaining a reliable 

new foundry.

To increase its flexibility and reduce its dependence on TI, Ramtron sought to 

develop a second foundry relationship with IBM. That effort, however, never succeeded. 

Thomas Davenport, Ramtron‘s Vice President of Technology at the time of the Merger,21

described the Company‘s attempt to work with IBM. Davenport headed up a team of six 

people that worked from 2009 until spring 2012, attempting to get IBM up and running as 

a second Ramtron foundry. They incurred $17 million in direct costs in addition to $16 

million in capital equipment purchased by Ramtron and provided to IBM to enable it to 

produce F-RAM.22 But, in what Davenport considered a ―huge personal 

disappointment,‖23 the integration project failed and Ramtron never achieved a single 

 

19 Tr. 49 (Richards).

20 Id. at 50-52 (Richards); id. at 187-88 (Davenport).

21 Davenport began working for Ramtron in 1986. He started as an equipment 

engineer and worked his way up to the Vice President position. He currently is 

employed by Cypress as the Vice President of Technical Staff. Tr. 183. 

22 Id. at 198-99; JX 128.

23 Tr. 198.
8

milestone. To put the IBM investment in context, in 2011 Ramtron had approximately 

$66 million in revenue.24

The witnesses at trial uniformly attested to the difficulty of transitioning 

foundries.

25 Ramtron‘s own experience with transitioning to TI and its failed attempt to 

develop IBM as a foundry confirm this fact. Nevertheless, on July 20, 2012, about a 

month after Cypress launched its hostile bid for Ramtron, Ramtron entered into a 

manufacturing agreement with ROHM Co., Ltd. (―ROHM‖), a Japanese company, to act 

as Ramtron‘s second fab.26 Ramtron‘s management‘s five-year forecasts incorporate the 

purported cost savings that would derive from having ROHM operate as a second, or 

even the primary, foundry for Ramtron.

2. Ramtron’s business and finances

Ramtron‘s board of directors installed Eric Balzer as the Company‘s new CEO in 

January 2011.27 He hired Pete Zimmer to lead the Company‘s sales department. At 

Zimmer‘s recommendation, Scott Emley was hired to lead Ramtron‘s marketing 

department. Both Zimmer and Emley had worked at TI and joined Ramtron sometime in 

 

24 JX 215 [hereinafter ―Jarrell Rpt.‖] Ex. 8.

25 Tr. 49-50 (Richards); id. at 198 (Davenport) (noting that the difficulty and risk of 

transitioning foundries is ―substantially higher‖ in the case of transferring a 

specialty process like F-RAM if the new foundry has no experience with F-RAM); 

id. at 291 (Rodgers) (stating that ―in general, switching foundries is a big deal‖ 

and that the process requires a company to ―in effect, change the product‖).

26 JS ¶ 5. 

27 Id. ¶ 6.
9

2011.28 Richards officially became CFO in late 2011 or 2012.29 Thus, as of the time of 

the Merger, most of Ramtron‘s executives had been in their positions for less than two 

years and, in the case of Emley and Zimmer, about a year.

The difficult transition from Fujitsu to TI caused problems for Ramtron‘s day-today business throughout 2011 and into 2012. A brief overview of Ramtron‘s sales 

process is required in order to understand that effect. Ramtron sold some of its product 

directly to customers, but the majority was sold to distributors who in turn sold the 

products to the end users.30 Ramtron also recognized revenue on a point-of-purchase

basis instead of a point-of-sale basis. Under the point-of-purchase system, revenue is 

recognized when the product is shipped to a distributor. By contrast, under the point-ofsale method, revenue is only recognized when the product is sold to the end user, whether 

directly by the Company or indirectly by the distributor.31

Theoretically, the two systems should arrive at the same results. Unless the 

distributors are buying exactly the same amount of inventory as they are selling during 

each financial reporting period, however, the systems will result in revenue being 

recognized at different times. To take a simplistic example, suppose a company sells 

100% of its products through distributors and that the company develops a new product 

 

28 Tr. 63-64 (Richards). 

29 Id. at 22.

30 Id. at 158 (Richards).

31 Id. at 30-31 (Richards).
10

in the first quarter. The following chart provides an example of how the company would 

recognize revenue under the two different regimes assuming the company sold 100 units 

of the product to the distributors at $1 each over the course of a year:

Revenue Recognition Comparison

Revenue Recognized

Quarter

Distributors

Point-of-Purchase Method Point-of-Sale Method

Buy Sell

Q1 20 0 $20 $0

Q2 30 10 $30 $10

Q3 40 20 $40 $20

Q4 10 30 $10 $30

This comparison deliberately highlights an important dispute between the parties in this 

case: the point-of-purchase method makes it difficult to forecast actual demand because 

the distributors provide a buffer. Indeed, in this example, under the point-of-purchase 

method, demand appears to be falling, while under the point-of-sale method, it appears to 

be rising.

Several of the witnesses testified that they believed Ramtron‘s point-of-purchase 

revenue system made it more difficult accurately to forecast future sales.32 The revenue 

recognition system matters for two reasons. First, as already mentioned, distributor 

 

32 Id. at 30 (Richards); id. at 192 (Davenport); id. at 299-302 (Rodgers); id. at 396-97 

(Buss). 
11

activity can mask actual demand. The difficult transition from Fujitsu to TI forced 

Ramtron to place its customers on allocation in or around 2011. Because Ramtron‘s FRAM already was designed into many of their customers‘ products, those customers 

needed to ensure that they would have a sufficient supply of F-RAM. After they were

placed on allocation, many customers apparently increased their orders accordingly.33 

For example, a customer that was allocated 80% of its ordered amount potentially would 

order five units for every four that it actually needed. This increase in orders led 

Ramtron to increase the number of wafers it was ordering from TI. The upshot of this 

chain of events was a massive inventory bubble, over-recognition of revenue, and a

resulting cash crunch for Ramtron because it then had to pay for the extra inventory it 

ordered.34 Because of its point-of-purchase revenue recognition, Ramtron recognized 

these additional distributor orders as revenue, even though the over-ordering was not 

reflective of ―real‖ underlying demand, but instead, at least in part, was an effort of the 

customers to game the allocation system.

The second reason that Ramtron‘s point-of-purchase revenue recognition system is 

relevant is because it allows management to alter the Company‘s revenue by forcing 

more inventory into the distribution channels. This practice is known as ―channel 

stuffing.‖ As discussed in more detail in Section III.A infra, I find that Ramtron‘s 

 

33 Id. at 50-51 (Richards); id. at 187-88 (Davenport).

34 Id. at 52 (Richards) (describing the resulting difficulty when TI would not extend 

credit for the over-order of wafers).
12

management did stuff the channel in the first quarter of 2012, thereby distorting the 

company‘s revenue. 

The combination of over-orders from customers that were placed on allocation and 

Ramtron‘s stuffing of the channel led to a massive build-up of inventory. The chart 

below35 shows the amount of inventory Ramtron had accumulated as of the time of the 

Merger. Because of its point-of-purchase accounting system, Ramtron already had 

recognized this inventory as revenue. As this chart shows, in the first quarter of 2012, 

Ramtron had 3.6 times as much inventory as a year earlier.

Ramtron Inventory

6.8 7 5.8 5.4 7

10.7

16.7

22.8

25.5 24.1

21

0

5

10

15

20

25

30

Q1

2010

Q2

2010

Q3

2010

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Inventory ($ millions)

This inventory needed to be financed, which took a serious toll on Ramtron‘s cash 

position. Ramtron‘s primary lender was Silicon Valley Bank (―SVB‖). Throughout 2011 

 

35 The data in this chart is drawn from Exhibit 5 to the Jarrell Report.
13

and 2012, the years affected by the inventory bubble, Ramtron either missed or needed to 

renegotiate its loan covenants repeatedly. For example, the Company missed its April 

2011 liquidity covenant and received a forbearance for May of that year.36 A July 7, 

2011 Form 8-K filing states that on June 30, 2011, Ramtron entered into a Default 

Waiver and Fifth Amendment to its loan agreement with SVB, an amendment that cost 

the Company $20,000.37

Around this time, Cypress began expressing an interest in Ramtron. On March 8, 

2011, Cypress made a non-public written offer to Ramtron for $3.01 a share.38 Ramtron 

rejected the offer as inadequate later that month. The offer represented a 37% premium 

over the March 8 closing price of Ramtron‘s stock.39 Rodgers described the offer as 

including ―a high market premium to say we were serious and not to try to squeeze on 

them.‖40 

After rebuffing Cypress and renegotiating its bank covenants, Ramtron still 

needed capital. SVB apparently had shifted to lending to Ramtron on an asset-backed 

basis, meaning that its loans were collateralized by the Company‘s receivables instead of 

being unsecured. Ramtron considered borrowing from other lenders, but concluded that 

 

36 JX 22; Tr. 25 (Richards).

37 JX 24.

38 JS ¶ 8. 

39 JX 14.

40 Tr. 285.
14

the cost was too high.41 So, in July 2011, Ramtron launched a secondary public offering 

of 4,750,000 shares, which was roughly 20% of its outstanding shares.42 The secondary 

offering occurred at $2 per share, with a net to Ramtron of $1.79 after underwriting 

commissions and other charges.43 The Company used the proceeds of this equity raise 

largely for working capital to pay off its excess inventory.44 

As the above chart shows, Ramtron‘s inventory continued to increase throughout 

2011. Despite the recent equity raise, Ramtron soon fell short on cash again. At least 

one internal Company email from January 2012 suggests that the first quarter covenants 

would be tight.

45 And, by spring 2012, the Company was in a cash crunch of sorts. 

Richards emailed Davenport on March 3, 2012, that ―we are basically running on fumes 

in regards to cash management and related bank covenants, which we just announced 

new ones yesterday.‖46 These cash management problems continued after Cypress 

announced its hostile bid for Ramtron on June 12, 2012. Shortly after the merger 

agreement was signed, Richards provided Brad Buss, Cypress‘ then-CFO, with cash 

 

41 Id. at 54-55 (Richards).

42 Id. at 54 (Richards). 

43 JS ¶ 9.

44 Tr. 55 (Richards).

45 JX 35.

46 JX 43; Tr. 28 (Richards: explaining that this reference to the new bank covenants 

related to the fact that Ramtron recently had renegotiated its covenants yet again).
15

forecasts that showed the Company would go cash negative on October 26, 2012.47 In 

response, Cypress promptly began funding Ramtron.

48

 

Overall, the evidence shows that Ramtron continually had difficulty meeting its

bank covenants, but that SVB seemed willing to renegotiate those covenants. There is no 

evidence that SVB ever sought to call its loans or that the Company actually faced a 

serious risk of foreclosure. Richards concisely summed up Ramtron‘s relationship with 

SVB as ―rocky in regards to the covenants‖ but that he ―had a good relationship with the 

bankers.‖49 From the evidence of record, therefore, I conclude that the Company was 

cash-strapped and struggling from a liquidity standpoint at the time of the Merger, but 

that Ramtron was not, as Cypress suggests, a bankruptcy waiting to happen.

C. The Merger

On June 12, 2012, Ramtron issued a public letter declaring its intent to acquire 

Ramtron for $2.48 a share.50 Interestingly, the $2.48 offer reflected the same 37% 

premium to market as Cypress‘ March 2011 offer; the decrease in price corresponded to

 

47 JX 151.

48 Tr. 410 (Buss). 

49 Id. at 30.

50 JS ¶ 11. 
16

the fall in Ramtron‘s stock price.

51

 Ramtron rejected that offer as inadequate in a June 18

press release and announced that it had begun exploring strategic alternatives.52

Only two days after Cypress announced its public bid, Balzer, Ramtron‘s CEO,

ordered the creation of new long-term management projections (the ―Management 

Projections‖). While, as discussed infra, the parties vigorously dispute the accuracy of 

Ramtron‘s prior forecasts, there seems to be no dispute that the Company‘s management 

had not previously created multi-year forecasts and instead generally only created fivequarter forecasts.53

 Balzer oversaw the team in charge of creating the new management 

projections, which consisted of Richards, Brian Yates, who worked for Richards, 

Zimmer, and Emley.54

A June 14, 2010 email chain among those five individuals shows a team 

undertaking a new and unfamiliar project. As if emphasizing that the projections were 

not being prepared in the ordinary course of Ramtron‘s business, Balzer wrote that he 

wanted a ―product by product build up, with assumptions, for it to hold water in the event 

 

51 Tr. 294 (Rodgers).

52 JS ¶ 12.

53 The sole exception appears to be a set of projections created by Richards in 

February 2012 and sent to the Company‘s auditors in an effort to corroborate the 

extent of Ramtron‘s net operating loss tax assets. JX 40. Interestingly, the 2013 

forecasts included a confidence factor of 80% and the 2014 forecasts had a 

confidence factor of only 50%. Richards did not even bother providing a 

confidence factor for the 2015 forecasts. Id. (native file).

54 Tr. 59 (Richards).
17

of a subsequent dispute.‖55 Indeed, Richards testified that he understood the purpose of 

the projections to be twofold: marketing the company to a white knight and creating 

inputs for a DCF analysis.56 The Ramtron management team had never done long-term 

projections before.57 Zimmer, the head of sales, wrote that not even the automotive 

industry, which he apparently considered more predictable than the semiconductor 

industry, ―can do a line item 4 year forecast.‖58 He also suggested that for ―[o]ut years I 

would simply plug in 30% CAGR,‖

59 a comment that reinforces the inference that these 

projections were not produced in the ordinary course of business based on reliable data. 

Additionally, Balzer wanted the projections done using a point-of-sale approach, as 

opposed to Ramtron‘s standard point-of-purchase methodology. Ramtron‘s management 

team had never done point-of-sale projections.60 I describe the resulting projections in 

significantly more detail in Section III.A infra.

 

55 JX 60.

56 Tr. 59 (―Needham was going to market our company. . . . [O]ne of their tactics 

was to put us out to bid so hopefully maybe a white knight would come in. And, 

two, I think they used [the projections] for a discounted cash flow to come up with 

a basis to value the company, if you will.‖).

57 Id. at 63.

58 JX 60.

59 Id. By recommending use of a 30% CAGR, which generally stands for compound 

annual growth rate, Richards understood Zimmer to be advocating multiplying a 

base value by 1.3 for each year of the projection period. 

60 Tr. 63 (Richards).
18

Meanwhile, Cypress‘ hostile offer continued. On June 21, 2012, Cypress 

commenced a hostile tender offer for Ramtron at $2.68 per share.61 Ramtron‘s Board 

rejected the $2.68 price as inadequate and not in the best interests of the Company‘s 

stockholders. Accordingly, the Board recommended that the stockholders not tender 

their shares.62 Shortly thereafter, Ramtron issued its second quarter 2012 earnings, which 

were significantly below expectations. In the first quarter of 2012, Ramtron had reported 

$15 million in revenue and reaffirmed its public guidance for entire-year 2012 revenue of 

―approximately $70 million.‖63 On July 24, 2012, Ramtron reported $14.2 million in 

revenue for the second quarter and projected revenue of $14 to $14.5 million for the third 

quarter.64 These results and projections placed the Company on track to undershoot its 

full-year 2012 estimate by at least $10 million. On July 26, 2012, shortly after Ramtron‘s 

announcement, Merriman Capital, the only analyst covering Ramtron, downgraded the 

Company from ―buy‖ to ―neutral.‖

65

 Merriman also suspended its target price and 

observed that ―were Cypress to pull its offer for Ramtron, these shares might very well 

return to the $2.00 range or perhaps lower.‖66

 

61 JS ¶ 13.

62 Id. ¶ 14.

63 JX 47.

64 JX 96. 

65 JX 97.

66 Id.
19

The witnesses at trial agreed that Ramtron‘s second quarter performance was 

disappointing.67 The parties, however, vigorously dispute the reasons for that. Petitioner

assigns basically all of the blame for the poor second quarter to Cypress and denies that it 

resulted from any inherent weakness in Ramtron. According to Petitioner, the 

distributors pulled back their orders dramatically in light of Cypress‘ hostile bid, because 

they feared being terminated after the merger. For this proposition, LongPath relies 

mostly on Balzer‘s deposition testimony.

68

 Respondent argues that Ramtron‘s second 

quarter results reflected Ramtron‘s own operational failures.

It is conceivable that Cypress‘ offer may have had some negative effect on second 

quarter sales, but the weight of the evidence shows that operational shortcomings of

Ramtron were the primary cause of the decline in sales. Ramtron appears to run on a 

calendar fiscal year. As such, less than three weeks remained in June (and the second 

quarter) when Cypress issued its bear hug letter on June 12 and at most ten days remained 

after Cypress initiated its hostile tender offer. The most probable explanation for the 

poor second quarter is that Ramtron‘s management had stuffed the Company‘s 

 

67 Tr. 73 (Richards); id. at 302 (Rodgers); id. at 397 (Buss).

68 JX 245 [hereinafter ―Balzer Dep.‖] at 106 (―Part of the reason that sales fell off as 

soon as Cypress announced the acquisition is distributors that we had. . . . If these 

distributors were not distributors of Cypress product, it was their belief—and I 

heard this from Pete [Zimmer]—their belief then that Cypress would probably not 

protect them if they consummated the deal and they could be stuck with a whole 

bunch of product and, hence, they just stopped buying.‖). There is a potential 

hearsay problem with this testimony, but Respondent did not press any such 

objection in its briefing.
20

distribution channel with inventory in the first quarter of 2012, and that caused the 

Company‘s distributors to order less product in quarter two. I discuss channel stuffing in 

Section III.A infra. Here, it suffices to note that, as of the first quarter of 2012, Ramtron 

had $25.5 million in inventory, a 264% increase over the previous year. Even assuming 

Ramtron‘s optimistic 2012 projection of $70 million in revenue, Ramtron had roughly

nineteen weeks worth of inventory, for which it already had recognized revenue, at the 

beginning of the second quarter of 2012.

69

 A fiscal quarter contains only thirteen weeks. 

Other factors support the conclusion that Cypress‘ hostile bid did not drive 

Ramtron‘s poor second quarter performance. First, Davenport disagreed with the 

allegation that the distributors were pulling back because of Cypress. Davenport viewed 

Zimmer‘s comments to that effect as excuses for not hitting his sales targets.70 

Considering that Balzer admittedly based his assertion that the distributors were 

withholding orders on out-of-court statements made by Zimmer, who did not testify at 

trial, I accord it little weight. Second, it appears from the record that a significant number 

of Ramtron‘s products are ―designed into‖ the final products, meaning that the end users 

would need the semiconductors to complete their own products and thus would have

relatively stable, long-term demand. This makes it unlikely that demand dipped sharply 

at the end of Q2 because of Cypress‘ bid.71 For all of these reasons, I find that, although

 

69 A $70 million year would equate to weekly sales of, on average, $1.347 million. 

70 Tr. 209.

71 Id. at 402-04 (Buss).
21

Cypress‘ bid may have contributed slightly to Ramtron‘s poor performance in the second 

quarter of 2012, the main cause of that performance was Ramtron‘s own business reality.

Notwithstanding the poor second quarter, Cypress increased its offer price to 

$2.88 per share on August 27, 2012, and extended the term of the tender offer.72 On 

September 10, 2012, Ramtron‘s Board again concluded that the offer was inadequate and 

recommended that the stockholders not tender their shares.73 During the time Cypress 

was pursuing its hostile tender offer, Ramtron actively canvassed the market looking for 

other buyers. In fact, Ramtron contacted over twenty potential suitors, a process I discuss 

in more detail in Section III.C infra. None of those other companies, however, ever made 

a firm offer, even though the most serious of them had access to Ramtron‘s internal 

management projections.

 Beginning on September 12, 2012, representatives of Cypress and Ramtron 

engaged in active negotiations. Cypress increased its offer to $3.01 per share on 

September 16 and then again to $3.08 on September 17. Later that same day, Ramtron 

and Cypress agreed on the final transaction price of $3.10 per share.74 The parties signed 

 

72 JS ¶ 15.

73 Id. ¶ 16.

74 Id. ¶ 17.
22

the merger agreement on September 18,

75 and the Merger was approved by a stockholder 

vote on November 20, 2012.76

D. Procedural History

LongPath filed this appraisal action on December 11, 2012. After the parties 

engaged in discovery, the Court presided over a three-day trial from October 7 to 9, 2014. 

Eight witnesses testified, including the parties‘ experts. After extensive post-trial 

briefing, I heard final argument on March 3, 2015. 

I also note, for completeness, that a stockholder class action challenging the 

Merger was filed on October 15, 2012. Those plaintiffs moved to preliminarily enjoin 

the Merger, but that motion was denied. Thereafter, the defendants in the class action 

moved to dismiss. On June 30, 2014, I issued a memorandum opinion granting those 

motions and dismissing the stockholder class action with prejudice.77

E. Parties’ Contentions

Both parties base their positions on expert testimony. Petitioner called David 

Clarke as its expert; Respondent relied upon Gregg Jarrell. Not surprisingly, the experts 

arrived at widely disparate conclusions. Clarke contends that the fair value of Ramtron‘s

stock as of the Merger was $4.96 a share. Jarrell opines that the stock was worth only 

 

75 Id. ¶ 18. 

76 Id. ¶ 23.

77 Dent v. Ramtron Int’l Corp., 2014 WL 2931180 (Del. Ch. June 30, 2014).
23

$2.76. Petitioner‘s fair value of $4.96 a share is more than 274% of Ramtron‘s 

unaffected stock price of $1.81. 

Clarke bases his conclusion of $4.96 per share on a combination of a DCF analysis 

and a comparable transactions analysis, which he weighted at 80% and 20%,

respectively. Clarke relied on Ramtron‘s management projections and a three-stage DCF 

analysis to arrive at a value of $5.20 per share. He based his comparable transactions 

analysis on a dataset consisting of only two transactions and obtained a fair value of 

$3.99 per share. Because Clarke found no comparable companies, he did not rely on that 

valuation method.

Jarrell rather unusually began his analysis with two premises: (1) that the Merger 

price was the result of a fair and competitive auction; and (2) that the management 

projections were overly optimistic. Based on these predicates, Jarrell opted to examine 

the transaction price and back out any synergies in order to determine fair value. This 

approach resulted in a fair value of $2.76 per share. In addition, Jarrell conducted a DCF 

analysis, in which he relied upon the management projections he earlier concluded were 

overly optimistic. Based on that analysis, Jarrell opined, apparently in the alternative, 

that the fair value of the Company‘s shares was $3.08 each, a number coincidentally only 

two pennies from the Merger price. As a result of his analysis, Jarrell also concluded that 

there were no comparable companies or comparable transactions. 
24

Much has been said of litigation-driven valuations, none of it favorable.

78

 Here, 

the parties have proffered widely disparate valuation numbers which differ, at the 

extremes, by $2.44 as compared to an unaffected stock price of $1.81 and a deal price of 

$3.10. LongPath asks this Court to adopt its $4.96 figure and conclude that the market 

left an amount on the table exceeding Ramtron‘s unaffected market capitalization. This 

would be a significant market failure, especially in the context of a well-publicized 

hostile bid and a target actively seeking a white knight. But, LongPath itself is a market 

participant. It bought its shares after the announcement of the Merger, thereby 

effectively purchasing an appraisal lawsuit. Although such arbitrage can be profitable on 

the merits when flawed deals undervalue companies, LongPath invested an amount so 

small that, even if I accepted its position and concluded that Ramtron‘s true value at the 

time of the Merger was somewhere in the range of $4.96 per share, this lawsuit is likely a 

less-than-break-even proposition for LongPath after considering its litigation expenses. 

Respondent, on the other hand, has submitted an eyebrow-raising DCF that, based on 

projections its expert presumed were overly optimistic, still returns a ―fair‖ value two 

cents below the Merger price.

 

78 E.g., In re Dole Food Co., 2014 WL 6906134, at *11 (Del. Ch. Dec. 9, 2014) (―In 

appraisal proceedings, the battling experts tend to generate widely divergent 

valuations as they strive to bracket the outer limits of plausibility.‖); Finkelstein v. 

Liberty Digital, Inc., 2005 WL 1074364, at *13 (Del. Ch. Apr. 25, 2005) (―Men 

and women who purport to be applying sound, academically-validated valuation 

techniques come to this court and, through the neutral application of their 

expertise to the facts, come to widely disparate results, even when applying the 

same methodology.‖).
25

II. STANDARD OF REVIEW

In a statutory appraisal action brought pursuant to 8 Del. C. § 262, the Court is 

tasked with ―determin[ing] the fair value of the shares exclusive of any element of value 

arising from the accomplishment or expectation of the merger or consolidation, together 

with interest, if any, to be paid upon the amount determined to be the fair value.‖79 The 

Delaware Supreme Court has held that ―fair value‖ is ―the value to a stockholder of the 

firm as a going concern, as opposed to the firm‘s value in the context of an acquisition or 

other transaction.‖80 ―Accordingly, the corporation must be valued as a going concern 

based upon the  ̳operative reality‘ of the company as of the time of the merger.‖81 

Section 262 directs that, in making this determination, ―the Court shall take into account 

all relevant factors.‖82 Our case law has made clear that ―[a]ny  ̳techniques or methods 

which are generally considered acceptable in the financial community and otherwise 

admissible in court‘ may be used.‖83

 

79 8 Del. C. § 262(h).

80 Golden Telecom, Inc. v. Global GT LP, 11 A.3d 214, 218 (Del. 2010).

81 M.G. Bancorporation, Inc. v. Le Beau, 737 A.2d 513, 525 (Del. 1999) (quoting 

Cede & Co. v. Technicolor, Inc., 684 A.2d 289, 298 (Del. 1996)).

82 8 Del. C. § 262(h).

83 Gholl v. eMachines, Inc., 2004 WL 2847865, at *5 (Del. Ch. Nov. 24, 2004) 

(quoting Weinberger v. UOP, Inc., 457 A.2d 701, 713 (Del. 1983)).
26

As is well-known, the Delaware appraisal statute places the burden of proof on 

both parties.84 ―If neither party satisfies its burden, however, the court must then use its 

own independent business judgment to determine fair value.‖85

III. ANALYSIS

A survey of the case law reveals that there are four main, or at least recurring,

valuation techniques generally presented in an appraisal action: a discounted cash flow or 

DCF analysis, a comparable companies approach, a comparable transactions approach, 

and an examination of the merger price itself, less synergies. Like all tools, each has its 

own strengths and weaknesses. The parties agree that there are no comparable 

companies. Jarrell and Clarke disagree about whether there are comparable transactions, 

but the universe of potential comparables, even according to Clarke, is limited to two. 

Both sides conducted a DCF analysis, but disagree about certain issues in addition to the 

reliability of the Management Projections, such as the proper size premium, the 

appropriate method of modeling future capital expenditures, and whether a two-step or 

three-step DCF is more appropriate, as well as several more minor issues. The parties 

strongly disagree about the appropriate weight, if any, to give the Merger price, which 

Respondent weighs at 100%. Petitioner places the most weight on its DCF analysis. 

 

84 M.G. Bancorporation, Inc., 737 A.2d at 520 (―In a statutory appraisal proceeding, 

both sides have the burden of proving their respective valuation positions by a 

preponderance of the evidence.‖).

85 Gholl, 2004 WL 2847865, at *5.
27

Accordingly, I begin there and then address the utility of a comparable transactions

approach before turning to the transaction price.

A. A Discounted Cash Flow Analysis Is Inappropriate Because the Management 

Projections Are Unreliable

A discounted cash flow analysis ―involves projecting operating cash flows for a 

determined period, setting a terminal value at the end of the projected period, and then 

discounting those values at a set rate to determine the net present value of a company‘s 

shares.‖86 ―Typically, Delaware courts tend to favor a DCF model over other available 

methodologies in an appraisal proceeding. However, that metric has much less utility in 

cases where the transaction giving rise to appraisal was an arm‘s-length merger, [or] 

where the data inputs used in the model are not reliable . . . .‖87 The foundational inputs 

of a DCF are the company‘s cash flows.88 In determining those inputs, this Court has 

placed substantial weight on the projections of the incumbent management. Indeed, ―this 

Court prefers valuations based on management projections available as of the date of the 

 

86 Doft & Co. v. Travelocity.com Inc., 2004 WL 1152338, at *5 (Del. Ch. May 21, 

2004).

87 Highfields Capital, Ltd. v. AXA Fin., Inc., 939 A.2d 34, 52-53 (Del. Ch. 2007).

88 Cf. Laidler v. Hesco Bastion Envt’l, Inc., 2014 WL 1877536, at * 8 (Del. Ch. May 

12, 2014) (―Though DCF is more prominently employed in Delaware appraisal 

litigation, both parties‘ experts opine that employing a DCF is not feasible here 

because [the company‘s] management never made cash flow projections in the 

ordinary course of its business.‖).
28

merger and holds a healthy skepticism for post-merger adjustments to management 

projections or the creation of new projections entirely.‖89 

The reason that ―Delaware law clearly prefers valuations based on 

contemporaneously prepared management projections‖ is ―because management 

ordinarily has the best first-hand knowledge of a company‘s operations.‖90 These 

projections are useful in appraisals, because they ―by definition, are not tainted by postmerger hindsight and are usually created by an impartial body. . . . When management 

projections are made in the ordinary course of business, they are generally deemed 

reliable.‖91 By corollary, projections prepared outside of the ordinary course do not 

enjoy the same deference. In fact, management projections can be, and have been, 

rejected entirely when they lack sufficient indicia of reliability, such as when they were

prepared: (1) outside of the ordinary course of business; (2) by a management team that 

never before had created long-term projections; (3) by a management team with a motive 

to alter the projections, such as to protect their jobs; and (4) when the possibility of 

litigation, including an appraisal action, was likely and probably affected the neutrality of 

 

89 Cede & Co. v. JRC Acq. Corp., 2004 WL 286963, at *2 (Del. Ch. Feb. 10, 2004).

90 Doft & Co., 2004 WL 1152338, at *5.

91 Cede & Co. v. Technicolor, Inc., 2003 WL 23700218, at *7 (Del. Ch. Dec. 31, 

2003), revised (July 9, 2004), aff’d in part, rev’d in part, 884 A.2d 26 (Del. 2005).
29

the projections.

92

 These factors go to the reliability of the projections. In this case, the 

Ramtron management projections suffer from all of these problems. 

1. A new Ramtron management team prepared projections not in the ordinary 

course using a methodology they never had employed before

The team in charge of creating the new Management Projections consisted of 

Richards and one of his employees, Zimmer, and Emley, with oversight by Balzer.93 

According to Richards, the projections started with the numbers provided by the sales 

department, because most of the Company‘s costs either were fixed or a percentage of 

 

92 Gearreald v. Just Care, Inc., 2012 WL 1569818, at *4 (Del. Ch. Apr. 30, 2012) 

(listing these four factors as reasons not to afford deference to the projections); see 

also Huff Fund Inv. P’ship v. CKx, Inc., 2013 WL 5878807, at *9-11 (Del. Ch. 

Nov. 1, 2013) (rejecting management projections prepared out of the ordinary 

course that included substantial speculative elements), holding left unmodified, 

2014 WL 2042797 (Del. Ch. May 19, 2014), both aff’d, 2015 WL 631586 (Del. 

Feb. 12, 2015) (TABLE); Doft & Co., 2004 WL 1152338, at *5-6 (finding 

management projections unreliable because: (1) management themselves did not 

regard them as reliable; and (2) the company, and seemingly the industry, was 

deemed nearly impossible to forecast in the short term, much less the long-term).

Recent cases continue to evaluate the reliability of management projections on 

similar grounds. See, e.g., Merlin P’rs LP v. AutoInfo, Inc., 2015 WL 2069417, at 

*8 (Del. Ch. Apr. 30, 2015) (refusing to rely on management projections where: 

(1) management never before had prepared similar projections; (2) the projections 

were so ―indisputably optimistic‖ that the petitioner‘s own expert testified that a 

discount would have been appropriate; and (3) management ―itself had no 

confidence in its ability to forecast‖); Owen v. Cannon, 2015 WL 3189204, at *19-

21 (Del. Ch. June 17, 2015) (rejecting an attack on the management projections 

when those projections did not include speculative business items, were not 

inconsistent with historical performance, were not ―created by novices,‖ and 

instead generally resulted from a ―deliberate, iterative process over a period of 

three years to create, update and revise multi-year projections for the Company‖).

93 Tr. 59 (Richards).
30

revenue, so the revenue numbers were the most important inputs.94 Zimmer and Emley 

were the lead individuals responsible for developing the sales (and, hence, revenue) 

numbers. Both had been with the Company at most a year when they began creating the 

new projections.95

Aside from having relatively new employees tasked with creating the inputs, the 

team that developed the Management Projections utilized: (1) a new product-by-product 

build-up method; (2) a point-of-sale instead of the usual point-of-purchase methodology; 

and (3) a multi-year projection period.96 The Ramtron management team previously had

not created projections using any of these methods, much less all three. 

Additionally, the projections were not prepared in the ordinary course of business. 

There is no evidence Ramtron ever had prepared forecasts for more than five quarters, 

with the exception of Richards‘s deferred tax asset projections.

97

 Balzer ordered the 

projections created immediately after Cypress issued its bear hug letter. Thus, these 

projections were prepared in anticipation of potential litigation, or, at least, a hostile 

takeover bid. Balzer explicitly wrote that he wanted a ―product by product build up, with 

assumptions, for it to hold water in the event of a subsequent dispute.‖98 Furthermore, at 

 

94 Id. at 60.

95 Id. at 64.

96 Id. at 63 (Richards); see also JX 60.

97 See supra note 53.

98 JX 60.
31

least Richards understood one of the purposes of the projections was to serve as a 

marketing tool in Needham‘s hunt for a white knight.99 This knowledge gave the 

management team an incentive to err on the optimistic side.

In sum, Ramtron‘s new management team employed a new methodology to create 

long-term projections, which they were not accustomed to doing, out of the ordinary 

course of business, with knowledge that the projections could or would be used: (1) in a 

subsequent dispute; (2) in marketing the Company; (3) as the inputs for Needham‘s DCF 

analysis;100or (4) any combination of those three possibilities. These projections, 

therefore, facially lack the indicia of reliability that generally have led Delaware courts to 

defer to management projections. I now turn to more specific problems with the 

Management Projections that reinforce the conclusion that the Projections are unreliable.

2. Management’s forecasting capabilities

The parties vigorously dispute Ramtron management‘s forecasting accuracy. One 

dispute, for example, involves Respondent‘s contention that Ramtron often missed its 

publicly issued guidance for annual revenue going back to 2007, four years before 

Zimmer and Emley even joined the Company. This line of attack is something of a red 

herring. The proper focus should be on the forecasting accuracy of the management team 

that actually made the projections. Whether other, prior executives had or lacked the gift 

of seeing into the Company‘s future and predicting the success of its business is less 

 

99 Tr. 59.

100 Id.
32

relevant and barely probative of the forecasting capabilities of the pre-Merger 

management team. Accordingly, I would assign little weight to Ramtron‘s alleged

historic forecasting prowess, even assuming it was proven.

The record is surprisingly unclear on exactly what projections were made by the 

then-current Ramtron management team, aside from the occasional public guidance.101 

The parties‘ main disagreement over management‘s forecasting abilities concerns a 

waterfall chart. The chart shows forecasts by quarter. Respondent contends that the chart 

represents management‘s ongoing internal forecasts. Petitioner argues that it depicts 

nothing but ―stretch goals.‖ The answer is somewhat important. If the waterfall chart in 

fact represents actual forecasts, then Ramtron‘s ability to forecast its own business more 

than two quarters out was quite poor. On the other hand, if the chart merely reflects 

stretch goals, then it loses much of its impact. The weight of the evidence convinces me 

that the waterfall chart represented actual forecasts, but I still accord that chart only 

moderate weight in my evaluation of the Management Projections. Before explaining 

why, I have included below a portion of the waterfall chart.

102

 

101 E.g., JX 47 (forecasting, on April 19, 2012, $70 million in total 2012 revenue). 

On February 22, 2011, Ramtron forecasted between $65 and $70 million in total 

2011 revenue. JX 294. Actual revenues for 2011 were $66.4 million. JX 215 

Ex. 3. The 2011 forecast likely was not made by exactly the same management 

team and neither the 2011 nor the 2012 forecasts utilized a point-of-sale or a 

bottoms-up line-item methodology. Thus, the relevance of the 2011 and 2012 

forecasts, as predictors of the accuracy of the Management Projections, is 

marginal, at best.

102 JX 39. This chart was included in a presentation to the Ramtron Board and is 

dated February 9, 2012. The first two columns indicate the month and the quarter 
33

Date Qtr Q1 

2011

Q2 

2011

Q3 

2011

Q4 

2011

Q1 

2012

Q2 

2012

Q3 

2012

Q4 

2012

Apr. 

2010

Q2 

2010

$21,000

July 

2010

Q3 

2010

$21,000 $23,000

Oct. 

2010

Q4 

2010

$21,000 $23,000 $24,000

Dec. 

2010

Q1 

2011

$21,000 $22,000 $24,000 $25,000

Jan. 

2011

Q1 

2011

$10,000

$10,440

$15,000 $20,000 $22,000

Apr. 

2011

Q2 

2011

$15,000

$16,537

$20,000 $22,000 $20,000

July 

2011

Q3 

2011

$21,500

$21,736

$22,532 $18,000 $21,500

Oct. 

2011

Q4 

2011

$22,300

$16,905

$20,000 $22,000 $21,500

Feb. 

2012

Q1 

2012

$14,000

$15,000

$15,000

$14,200

$18,000 $20,000

Respondent‘s argument is straightforward: the waterfall chart appears in a 

presentation to the Board,103 and there is no indication that the numbers are anything 

other than ordinary-course forecasts. LongPath relies on a pair of ―Sales Update‖ 

presentations that refer to the numbers in the waterfall chart as ―stretch goals.‖104 

 

when each particular forecast was made. The remaining columns are the quarters 

being forecasted. For unknown reasons, there are two sets of forecasts in the first 

quarter of 2011. The bolded number represents the actual results in thousands of 

dollars for each quarter. For example, the cell Q2 2010 by Q1 2011 represents 

management‘s forecast, as of the second quarter of 2010, for revenue in the first 

quarter of 2011. I have added the actual results for Q1 and Q2 2012, which were 

not yet known as of February 9, 2012.

103 Indeed, an earlier version of the same chart appeared in an October 18, 2011 board 

presentation entitled ―Financial Outlook.‖ JX 31. That chart similarly was 

entitled ―Sales Forecast Waterfall Chart,‖ as in JX 39, and it contained no 

indication that the figures presented were ―stretch‖ goals. 

104 JX 313 (Oct. 18, 2011); JX 314 (Feb. 13-14, 2012). 
34

Respondent advances the theory (and urges the Court to infer) that Zimmer, as the Vice 

President of Sales, referred to the forecasts as stretch goals because, as the head of sales, 

he primarily was responsible for failing to meet revenue targets. At trial, Ramtron‘s Vice 

President of Technology, Davenport, similarly suggested that Zimmer blamed Ramtron‘s 

poor second quarter on Cypress as an excuse to cover up his own poor performance.105

More practical reasons lead me to the conclusion that the waterfall chart likely 

represented management‘s actual forecasts. First, contemporaneous emails suggest that 

the management team saw these numbers as goals they should hit. In a late January 2012 

email chain, Balzer writes to Zimmer, Richards, and Yates that the Company ―really 

need[s] to find a way to hit $14.5. That is what we said we would do.‖106 The first 

quarter 2012 forecast for that quarter was $14 million, as the chart above shows. Second, 

the very idea of ―stretch‖ or ―reach‖ goals requires targets that are, as the names imply, 

actually within reach.107 Many of these forecasts were wildly incorrect. In December 

2010, for example, the Company forecasted $21 million for the first quarter of 2011 (the 

very next quarter), a quarter in which actual revenue was $10.4 million, less than half of 

the forecast. Relatedly, as the actual quarter drew closer, management generally reduced 

 

105 Tr. 209, 232.

106 JX 36.

107 See Gholl, 2004 WL 2847865, at *9 (rejecting contention that management 

projections were unrealistic reach goals and noting: ―If the 2002 budget 

represented management‘s wildest dreams come true, it would be illogical and 

callous to key the Bonus Plan to even higher targets that were not achievable‖).
35

its forecasts to better approximate the actual revenue. As the quote from Balzer suggests, 

the management team treated these numbers as real targets, not lofty stretch goals.108 

Third, if these are not actual forecasts, then the record lacks evidence of regularly created 

and updated management forecasts, i.e., if the waterfall chart only contains stretch goals, 

then management‘s publicly issued guidance would be the only basis for assessing its 

forecasting. 

I find it most likely that management began with high aspirations for future 

quarters and reduced those expectations toward the actual expected results as the quarter 

drew nearer. This suggests that management‘s near-term forecasting abilities were 

mediocre at best. Even so, the waterfall forecasts and the public guidance forecasts were 

done with a different methodology than the Management Projections. Accordingly, I 

conclude that management, even under its traditional forecasting system, was of middling 

quality when it came to forecasting Ramtron‘s future business. Several witnesses at trial 

testified that, in general, the semiconductor business is difficult to forecast.109 Indeed, 

after Ramtron issued its weak second quarter 2012 earnings, Merriman Capital issued a 

report that suspended its target price for the Company and stated: ―We simply can‘t 

 

108 The February 2012 projections cumulatively estimate $67 million in revenue for 

2012. This is the same number used by Richards in a set of projections prepared 

to justify the Company‘s deferred tax assets to its auditors. JX 40. Richards‘s use 

of the waterfall chart forecast numbers for projections provided to the Company‘s 

auditors further supports my finding that these were not ―stretch‖ goals. 

109 Tr. 31-32 (Richards); id. at 320-21 (Rodgers: explaining that rigorous competition, 

technological change, and macroeconomic factors make the industry difficult to 

forecast); id. at 378-80 (Buss).
36

figure out how to model this company consistently at the current time.‖110 Ramtron‘s 

management also recognized its own limited success in forecasting.111 In sum, 

management‘s lack of success in accurately projecting future revenue in the past provides

another reason to doubt the reliability of the Management Projections.

3. The projections incorporate unrealistic assumptions regarding ROHM

I also note that the Management Projections assume cost reductions, over time,

associated with the transition to ROHM‘s foundry. The projections reflect an assumption 

that production of F-RAM at ROHM would to begin in January 2013 at 150,000 units a 

 

110 JX 97.

111 Balzer candidly conceded the Company was mediocre at forecasting:

Q: What was the quality of those forward-looking 

projections when you took over as CEO?

A: Probably mediocre. 

Q: Did you attempt to make improvements in the quality 

of the projections?

A: Yes.

Q: Did you succeed? 

A: I‘d say no.

Q: Why not?

A: . . . [Y]ou need to understand the market . . . . And 

while we were working very hard on that, we weren‘t 

there. 

Balzer Dep. 50. These comments temper the reliability of Balzer‘s position that 

the Management Projections ―were the most likely of what would happen if 

Cypress walked away.‖ Id. at 83.
37

month and increase by 50,000 units per month thereafter.

112

 These assumptions are too 

speculative to merit any deference.113 

Ramtron entered into a manufacturing agreement with ROHM in late July 2012 

pursuant to which ROHM would serve as a second foundry for Ramtron.114 According to 

a July 23, 2012 press release, ―Initial low-density F-RAM products have already been 

qualified for commercial production and Ramtron expects to receive and begin selling the 

first devices produced on ROHM‘s manufacturing line within approximately 60 days.‖115 

As already described, it took Ramtron seven years to transition entirely from Fujitsu to 

TI. That process went so poorly that it forced Ramtron to place its customers on 

allocation in 2011. Ramtron‘s earlier efforts to develop IBM as a second foundry took 

place over three years and caused it to incur more than $30 million in direct costs and 

equipment expenses. That endeavor failed entirely. Additionally, the evidence shows 

that, in July 2012, Ramtron was not flush with cash. The IBM venture suggests that 

establishing a new foundry requires a substantial monetary investment, and Ramtron‘s 

liquidity situation in the summer of 2012 makes it doubtful that Ramtron would have

 

112 JX 170 native file.

113 See Gearreald, 2012 WL 1569818, at *5-6 (concluding that the requirement that a 

company be valued as a going concern based on its operative reality at the time of 

the merger required the exclusion of ―speculative costs or revenues‖); see also 

Huff Fund Inv. P’ship, 2013 WL 5878807, at *11 (finding the inclusion or 

exclusion of significant contract revenues so speculative as to render the 

management projections unreliable). 

114 JX 95.

115 Id.
38

been able to finance the continued development of ROHM as a foundry.

116

 In light of 

this evidence, as well as the uniform testimony on the difficulty of transitioning 

foundries, I do not find credible the proposition that Ramtron reasonably could expect to

begin commercial production at ROHM in sixty days and start enjoying cost savings 

within six months.117

Additionally, evidence presented at trial buttresses this conclusion. Consistent 

with the other testimony on the lead time for getting a product from concept to fullfledged commercial sale,118 Davenport testified the term ―initial low-density F-RAM 

products‖ referred to sample quantities that Ramtron was ―going to take over ROHM‘s 

design and try to commercialize them as samples. They weren‘t cost-effective but they 

would seed the market.‖119 In fact, Ramtron never got further than this initial sample 

stage. Davenport further testified that Ramtron ―never got so far as transfer[ing] our 

designs to the ROHM foundry‖ before the Merger closed.120 It also appears that ROHM 

 

116 E.g., Tr. 410 (Buss: commenting that, upon acquiring Ramtron, Cypress 

discovered that the Company still had unpaid legal bills from the beginning of 

2012). Indeed, Ramtron was on pace to go cash negative before the end of 

October 2012. JX 151.

117 JX 170 native file (assumption of per part cost reductions). 

118 See supra notes 16-18 and accompanying text. 

119 Tr. 225. 

120 Id. at 205. 
39

technologically lagged behind both TI and IBM as a foundry.121 I do not question the 

strategic judgment of Ramtron‘s management in seeking to implement the Company‘s 

manufacturing agreement with ROHM, but the record as a whole leads me to find that the 

ROHM assumptions built into the Management Projections were speculative and further 

undermine the reliability of those projections. 

4. The Management Projections rely on 2011 and 2012 revenue figures that 

were distorted because of customer allocation issues and channel stuffing

As discussed in the next Subsection, the Management Projections for revenue 

assume a constant growth rate of 24% for 2014, 2015, and 2016.

122

 This is an arbitrary 

method of predicting revenue growth if not supported by reasonable assumptions. Such 

simple modeling makes the reliability of the base year numbers crucially important—i.e., 

if a set of projections assumes constant growth from a starting number, the inaccuracy of 

that foundational input affects the reliability of the entire enterprise. Substantial evidence 

 

121 Id. at 207-08 (Davenport: discussing ROHM‘s wafer yield of 20% to 60%, as 

against a ―good‖ yield of 97%, which TI could achieve, all of which bears on 

supply costs); id. at 348-51 (Rodgers: testifying that ROHM lagged behind TI 

technologically, was not competitive in the marketplace against TI‘s products, and 

had a very different technology than TI that would make the foundry transition 

difficult, all of which raised questions about the economic viability of 

manufacturing microchips there); id. at 395 (Buss: stating that TI and IBM ―are 

probably two of the best, well-run, capable fabs in the world,‖ and that 

successfully introducing ROHM as a second foundry ―was definitely a long shot‖). 

The testimony of Cypress‘ officers and employees is obviously self-serving, but 

their remarks on the technological status of ROHM versus TI or IBM is not 

contradicted by any other evidence and comports with Ramtron‘s own difficult 

history in transferring foundries. 

122 JX 170 native file (year-over-year growth rates of -12%, 19%, 24%, 24%, and 

24%, for 2012 through 2016, respectively). 
40

in the record supports the conclusion that Ramtron‘s revenue in 2011, the last full year 

before Cypress‘ offer, is an unreliable figure. 

In Section I.B.2 supra, I discussed the massive inventory build-up that Ramtron 

experienced beginning in 2011. During no quarter in 2010 did Ramtron have more than 

$7 million in inventory. Over the course of 2011, however, Ramtron shipped a huge 

amount of inventory into its distribution channels until, in the first quarter of 2012, 

Ramtron had $25.5 million in inventory. Even under favorable assumptions for Ramtron, 

that amounts to about nineteen weeks of inventory in the channel and it consists of 

product for which Ramtron already had recognized revenue.123 In describing Ramtron‘s 

background, I found that this inventory build-up resulted at least in part from the supply 

shortages the Company faced as a result of its foundry transition. Those shortages forced 

the Company to place customers on allocation; the customers responded by over 

ordering. Because Ramtron recognized revenue when it shipped to distributors, it is 

reasonable to infer that an unknown, but not insignificant amount of Ramtron‘s revenue 

in 2011 actually reflected this over-ordering by customers, as opposed to a genuine surge 

in demand. In addition, because of the backlog of inventory that existed in the first 

quarter of 2012, it is logical that less revenue would be recognized later in 2012 as the 

inventory bubble was burned off, unless there was a significant uptick in demand.

Ramtron‘s management, however, expected to hit their reduced forecasts for the 

first quarter of 2012. Although I already have discussed the difficulties with the point-of-

 

123 E.g. Tr. 415 (Buss: describing Ramtron‘s inventory problem). 
41

purchase revenue recognition system, there is another pitfall not yet discussed: channel 

stuffing. Channel stuffing is the practice of stuffing inventory into the channel in order to 

recognize the attendant revenue sooner, notwithstanding the fact that the revenue does 

not correspond to underlying increases in demand. Hence, it is a form of revenue 

manipulation. 

I find that Ramtron‘s management pushed excess inventory into the Company‘s 

distribution channels in the first quarter of 2012. In an already referenced email chain 

from late January 2012, Balzer remarked that the Company ―really need[ed] to find a way 

to hit $14.5‖ million.124 Zimmer responded: ―I‘ll die trying. We‘ll for sure stuff channel. 

Next Qtr will suffer.‖125 There is no persuasive evidence that Balzer disagreed. 

Although Petitioner fights the channel-stuffing conclusion,

126 the combination of 

Zimmer‘s contemporaneous comments and the massive inventory buildup strongly

support the conclusion that Ramtron stuffed the channel in order to make its first quarter 

revenue forecast. 

All of this matters for two reasons. First, forcing excess inventory into the channel 

in early 2012 meant that there would be a corresponding fall off in revenue at some point 

 

124 JX 36. 

125 Id.

126 LongPath cites to statements by Balzer regarding other time periods that the 

Company should avoid stuffing the channel. JX 10; JX 242.
42

in the future absent a demand spike.127 As Zimmer predicted, the next quarter, Q2 2012, 

did suffer. Petitioner‘s efforts to attribute those disappointing results to Cypress‘ hostile 

offer, rather than weaknesses in Ramtron‘s own business practices, are unavailing.128 

Second, Ramtron‘s revenue figures for 2011 and the first half of 2012 do not accurately 

map to actual demand for the Company‘s products. LongPath argues that the 

quantification of the point-of-purchase versus point-of-sale issue reveals that, at most, 

Ramtron over-recognized 3.7% of its total revenue from 2010 through 2012.129 

Assuming Petitioner‘s math is correct, that is an over-recognition, in three years, of $6.6 

million for a company that only once in its history had had more than $70 million in 

revenue in a single year. 

The problem, however, goes beyond just the amount of improperly recognized 

revenue. The timing of the revenue also is affected significantly. If 2011 and 2012 are 

used as base years in forecasting, but those years include inflated revenue because of 

 

127 The evidence suggests that many or most of Ramtron‘s products were ―designed 

into‖ its customers‘ products. This long-term supply nature of Ramtron‘s business 

reduces the likelihood of dramatic short-term demand fluctuations. 

128 See supra notes 70-72 and accompanying text.

129 Pet‘r‘s Post-Trial Br. 34. My rather simplistic comparison of point-of-purchase 

versus point-of-sale revenue recognition supra suggested that the use of one 

system over the other affects only the timing of the revenue, not the amount. 

There are various reasons why using the point-of-purchase approach also may lead 

to over-recognition of revenue. The distributors may return inventory because, for 

example, they ordered too much or the products are obsolete. Distributors also 

may sell to the end-user for less than the list price, leading to a reduction in the 

actual revenue received. See Tr. 299-302 (Rodgers: comparing the two revenue 

recognition systems).
43

either over-ordering by customers placed on allocation or channel stuffing, then the 

reliability of the projections is affected. Thus, customer allocation issues in 2011 and 

channel stuffing in the first quarter of 2012 throw significant doubt on the accuracy of the 

underlying revenue figures for those periods. In that regard, I do not consider it 

productive (even assuming it is feasible) to attempt to quantify how much in extra 

revenue Ramtron recognized in 2011 or 2012 based on these factors.

130

5. The projections defy historical trends

Historical performance does not control a company‘s future performance. It is, 

however, a red flag when projections suggest a dramatic turnaround in a company despite 

no underlying changes that would justify such an improvement of business. This is the 

classic ―hockey stick‖ problem. The Management Projections, prepared days after 

Cypress made its bid and with knowledge that Needham would use the Projections to 

market the Company, fall into this category. Both revenue growth and gross margins are 

shown as undergoing dramatic improvements. The following chart shows Ramtron‘s 

historical revenue (for the ten years before the projection period) versus its projected 

 

130 Moreover, because Ramtron‘s management moved to a new revenue-recognition 

approach for the Management Projections, it is not clear what steps the Company 

took to avoid double counting revenue. As of the end of January 2012, Ramtron 

had about $21 million in inventory in its distribution channels. JX 34 (Zimmer 

email). That is more than a quarter‘s worth of revenue. But, the Company 

apparently did track to some extent the differences between point-of-sale and 

point-of-purchase revenues. JX 174. 
44

revenue.

131

 As the graphs make clear, the projection period suggests a period of 

previously unknown prosperity for Ramtron. Not only is the Company‘s historically 

volatile growth rate transformed into a consistently high growth rate, but the downward 

trend in revenue is replaced by a sharp, unprecedented increase in absolute revenue.132

This sharp uptick in revenue is in contrast to the fact that, at least dating back to 1994, the 

Company never has experienced four consecutive years of growth. 

 

131 The historical figures are drawn from Exhibit 8 of Jarrell‘s Report. These figures 

are for the years 2002 through 2011 and are in blue. The projected revenues are 

drawn from the native excel spreadsheet of JX 170, which is the final iteration of 

the Management Projections. The projection period is 2012 through 2016 and 

those numbers are displayed in red.

132 By 2012, the Company had experienced two consecutive years of revenue 

decreases. In fact, 2012 revenue was forecasted as less than 2008 revenue. 2016 

forecasted revenue, by contrast, nearly would exceed Ramtron‘s 2010 and 2011 

actual revenues combined.
45

Presented in another perspective, the following chart shows the Company‘s 

compound annual growth rate (―CAGR‖) over various periods.133 Only under the 

arbitrary 2005-2008 timeframe, which appears to be the Company‘s best-ever growth 

period, does historic growth approach projected growth. When comparing the five or ten 

years preceding the projections period, it is clear that the Management Projections 

forecast incredible growth. Indeed, the five-year projection period implies a CAGR of 

22.73%, which is roughly 3.36 times higher than the CAGR for the five years 

immediately preceding the projection period (2007-2011) and approximately 2.46 times 

greater than the ten-year period (2002-2011) before the management forecasts.

Time Period Years CAGR

2002-2006 5 7.79%

2005-2008 4 22.73%

2007-2011 5 6.77%

2009-2011 3 18.23%

2002-2011 10 9.23%

2012-2016 5 22.73%

 

133 The inputs are the same as the previous graph. CAGR provides the rate at which 

an initial value would need to grow each year in order to achieve a final amount. 

It is a measurement that smoothes out swings in growth over time. For CAGR, I 

use the formula: CAGR = ((End Value / Start Value)^(1 / Number of Years)) – 1. 

Note that, while, for example, 2002-2011 is a period of ten years, the input for the 

CAGR formula would be nine, because there are only nine periods of growth 

between year-end 2002 and year-end 2011. CAGR can be a misleading 

measurement tool, as the selection of years can dramatically affect the implied 

annual return. This is why multiple historical CAGR measurements are provided.
46

Petitioner attempts to justify the Management Projections as reasonable by 

comparing the projections to a set of internal Cypress projections. In what was called the 

President‘s Strategic Plan (the ―PSP‖), Cypress forecasted the potential F-RAM market in 

terms of total available market, service available market (which was Cypress‘ term for a 

product‘s core market) and predicted share of the market.

134

 Petitioner argues that, if 

Ramtron simply maintained the market share of the core F-RAM market that it had at the 

time of the Merger, then the Management Projections would be accurate. There are 

numerous problems with this argument: (1) Ramtron‘s management did not have the PSP 

when they were creating the Management Projections, so this thesis is an entirely post 

hoc justification for the Projections; (2) for the Management Projections to be accurate, 

Ramtron would have had to increase its market share significantly, not just maintain it; 

(3) to the extent that Cypress‘ predictions are relevant, the Management Projections 

would require Ramtron to capture a substantially larger portion of the market than 

Cypress predicted it would; and (4) perhaps most damaging to Petitioner‘s theory,

Cypress predicted that Ramtron, operating as an improved division of Cypress, would 

lose market share.

The chart below compares Cypress‘ predictions for Ramtron, as a division of 

Cypress, against the Ramtron Management Projections. Dollar values are in millions.

 

134 JX 199; Tr. 426-32 (Buss: explaining the various portions of JX 199, which is the 

PSP). 
47

2013 2014 2015 2016

Core Market $187 $218 $254 $288

Ramtron Share of Market, as Cypress Division $41 $55 $61 $67

Cypress F-RAM Market Share (forecast by Cypress) 22% 25% 24% 23%

Ramtron Management Projections $69 $85.6 $106.1 $131.6

Ramtron F-RAM Market Share (Petitioner‘s argument) 37% 39% 42% 46%

Market Share Gap

(Management Projections – Cypress Predictions)

15% 14% 18% 23%

Petitioner‘s argument is unpersuasive. The PSP forecasts Ramtron as a division of 

Cypress—i.e., after a possible merger. That alone makes the comparison of market share 

unavailing. More importantly, Cypress predicted a moderate, but falling market share for 

Ramtron or, at best, that Ramtron would maintain its market share.135 The Management 

Projections predict an entirely different trend under which Ramtron‘s market share would

increase by nearly 25%, i.e., Ramtron would capture another nine percent of the core FRAM market. By the year 2016, for the Management Projections to be accurate, 

Ramtron would need to hold twice as much of the core market as Cypress predicted it 

would. Considering all the evidence of record regarding projections, I find it unlikely 

that Cypress substantially would underestimate the potential of the very company it was 

about to purchase. Thus, Petitioner‘s attempts to show the ―reasonableness‖ of the 

Management Projections by comparing them to the Cypress PSP are unconvincing. 

Rather, the Projections defy historical trends.

 

135 In 2017, for example, Cypress predicted a 22% market share.
48

6. Management utilized other projections for ordinary business purposes

The fact which I find to be the final nail in the coffin for the Management 

Projections is that Ramtron did not rely on them in the ordinary course of its business. 

Although Balzer suggested that the Management Projections were used for other 

purposes, such as cash management,

136 the significance of those alleged uses is dubious. 

Richards, the CFO, credibly testified that he used other sets of projections for managing 

the Company‘s finances, such as providing estimated revenue and cash flow numbers to 

SVB, the Company‘s bank. 

The final version of the Management Projections utilized by Needham in 

preparing its fairness opinion is from September 18, 2012.137 The Needham presentation 

listed $58.2 million for estimated 2012 revenue, a slight discrepancy from the native 

excel spreadsheet of the Projections, dated August 28, 2012, which listed $58 million for 

2012.138 On July 17, 2012, however, Richards sent an email to SVB projecting $56.5 

million for 2012 (the ―July SVB Projections‖).

139

 On September 10, 2012, Richards sent 

another update to SVB that reduced that projection to slightly less than $54 million (the 

―September SVB Projections‖).140 Both the July and September SVB Projections pre-

 

136 Balzer Dep. 80-81.

137 JX 170. 

138 Id. & native file.

139 JX 93 & native file.

140 JX 136 & native file.
49

date the Needham presentation. The September SVB Projections are nearly 6.9% lower 

than the Management Projections. If the revenue growth assumptions from the 

Management Projections were applied to the September SVB Projections, the 

Management Projections would overstate five-year revenue by $31 million, even 

ignoring all of the other problems with the Management Projections I have discussed. 

Richards testified that he believed that the September SVB Projections ―were more 

accurate‖ and that he provided those projections to SVB because it was the Company‘s 

―sole source of borrowing‖ and he wanted to keep the bank ―apprised of the situation.‖141

7. There are insufficient reliable inputs to produce a reliable DCF analysis

In summary, the Management Projections suffer from numerous flaws.

Specifically, they: (1) were prepared by a new management team, (2) in anticipation of 

future disputes and of shopping the Company to potential white knights, (3) using a new 

methodology, and (4) were for a significantly longer period of time than previous

forecasts. In addition, I note the following problems: (5) management‘s track record at 

forecasting was questionable even under their standard method of forecasting; (6) the 

final projections incorporate speculative elements relating to ROHM, (7) rely on distorted 

base year figures that resulted from customer allocation issues and channel stuffing, and 

(8) predict growth out of line with historical trends; and, finally, (9) management itself 

was providing other, ―more accurate‖ projections to the Company‘s bank. None of the 

indicia that often justify deferring to management projections are present in this case. 

 

141 Tr. 81.
50

Thus, Petitioner has not proven that the Management Projections are reliable, and I 

conclude that they are too questionable to form the basis of a reliable DCF valuation.142

―[W]ithout reliable five-year projections, any values generated by a DCF analysis 

are meaningless.‖143 Having found that the Management Projections are unreliable and 

there are no other viable projections in the record,

144 I therefore conclude that it would be 

inappropriate to determine fair value based on a DCF analysis in this instance.

B. The Comparable Transactions Method Does Not Produce a Reliable Value

The parties‘ experts agree that there are no comparable companies to Ramtron.145 

Using another approach, Clarke, petitioner‘s expert, opined that there were two 

 

142 My conclusion that the Management Projections are unreliable prevents me from 

using those inputs. It is equally dubious to use either set of the SVB Projections, 

because they extend only for the 2012 calendar year and one of the main problems 

with the Management Projections is that they forecast an unrealistic rate of 

growth. Thus, even if the SVB Projections provided a reliable 2012 input, it still 

would not be clear what rate of growth to apply for future years. The parties, 

perhaps, could have advised on this issue. Instead of arguing that the Management 

Projections should be discounted a certain percentage, however, the parties took 

the opposite tactic of wholesale adoption or rejection of the Management 

Projections. This has forced the Court to choose one of those routes. Adopting 

instead some sort of middle ground would require me to engage in impermissible 

and unreliable speculation.

143 Huff Fund Inv. P’ship, 2013 WL 5878807, at *9.

144 Cypress prepared its own projections for Ramtron. JX 174. Those projections, 

however, predict Ramtron‘s performance as a division of Cypress. Tr. 321-23 

(Rodgers). Accordingly, they are not useful as a predictor of Ramtron‘s standalone operating potential. Furthermore, Cypress predicted substantially more 

conservative figures than Ramtron‘s management, even after accounting for 

improvements that Cypress anticipated making to Ramtron. 

145 JX 214 [hereinafter ―Clarke Rpt.‖] at 47; Jarrell Rpt. 84.
51

comparable transactions from which Ramtron‘s value could be derived.146 This analysis

resulted in an implied value for Ramtron of $3.99 per share, and Clarke accorded it a 

20% weight in his ultimate fair value determination.

147

 Jarrell concluded that there were 

no comparable transactions.

148

 For the following reasons, I conclude that Petitioner has 

not proven that the comparable transactions method is an appropriate valuation technique 

in this case.

A comparable transactions approach requires ―identifying similar transactions, 

quantifying those transactions through financial metrics, and then applying the metrics to 

the company at issue to ascertain a value. The utility of a comparable transactions 

methodology is directly linked to the  ̳similarity between the company the court is 

valuing and the companies used for comparison.‘‖149 ―Reliance on a comparable 

companies or comparable transactions approach is improper where the purported 

 ̳comparables‘ involve significantly different products or services than the company 

whose appraisal is at issue, or vastly different multiples.‖

150

 

146 Clarke Rpt. 51.

147 Id. at 58.

148 Jarrell Rpt. 87, 91.

149 Highfields Capital, Ltd. v. AXA Fin., Inc., 939 A.2d 34, 54 (Del. Ch. 2007) 

(quoting In re U.S. Cellular Operating Co., 2005 WL 43994, at *17 (Del. Ch. Jan. 

6, 2005)).

150 In re Orchard Enters., Inc., 2012 WL 2923305, at *9 (Del. Ch. July 18, 2012).
52

The purportedly comparable transactions are the acquisitions of Actel Corporation

(―Actel‖) and Virage Logic Corporation (―Virage‖), both of which Clarke concluded 

were companies that produced memory products but, like Ramtron, operated without 

their own foundry.151 Clarke computed multiples for the two firms based on the 

transactions involving them for the following financial metrics: (1) equity value 

(―EV‖)/last twelve months‘ revenue (―LTM‖); (2) EV/next twelve months‘ forecasted 

revenue (―NTM‖); and (3) EV/NTM + 1.152 Clarke then averaged the Virage and Actel 

multiples and derived an implied value for Ramtron from them. 

Jarrell contests Clarke‘s choice of comparable transactions. He notes that the 

proxy statement in the Virage transaction included a list of comparable companies from 

two industries similar to Virage‘s and that Ramtron was not listed in either group.153 It is 

unclear whether Jarrell believes that Actel is not comparable in and of itself, but he did 

observe that the multiples for that company support the Merger price as evidence of fair 

value. More importantly, Jarrell opines that the dispersion of the multiples for Actel and 

Virage is too great to be reliable and violates the ―law of one price.‖

154

 I agree with this 

criticism.

 

151 Clarke Rpt. 50-51. 

152 This is ―forecasted revenue for the one-year period after the next 12 months.‖ Id.

at 53. 

153 JX 216 [hereinafter ―Jarrell Rebuttal Rpt.‖] at 38. 

154 Id.
53

In the past, ―[t]his Court has found comparable transactions analyses that used as 

few as five transactions and two transactions to be unreliable.‖155 This ―dearth of data 

points . . . undermines the reliability‖ of the methodology.156 Here, there are only two 

data points and the multiples (shown below) differ significantly.157

Target Company EV/LTM

Revenue

EV/NTM

Revenue

EV/NTM + 1 

Revenue

Virage 4.43x 2.80x 2.25x

Actel 2.05x 1.72x 1.65x

Average 3.24x 2.26x 1.95x

Ramtron Financials $58.2M $69.0M $85.6M

Implied158

Equity Value

(Unadjusted

for Synergies)

$181.1M $148.4M $159.7M

Clarke then went on to: (1) subtract a 13% synergy discount from each of the implied 

equity values; and (2) average the three figures to arrive at a comparable-transactionsbased equity value for Ramtron of $141.9 million.

 

155 Merion Capital, L.P. v. 3M Cogent, Inc., 2013 WL 3793896, at *8 (Del. Ch. July 

8, 2013) (citing In re John Q. Hammons Hotels Inc. S’holder Litig., 2011 WL 

227634, at *5 (Del. Ch. Jan. 14, 2011) and In re U.S. Cellular Operating Co., 

2005 WL 43994, at *18).

156 Id.

157 Clarke Rpt. 54.

158 The implied equity value is not an exact multiple, because Ramtron‘s debt of $8.8 

million is subtracted out and the Company‘s cash of $1.3 million is added into the 

calculation. This results in netting out $7.5 million to obtain the implied equity 

value that is shown.
54

Even assuming these two transactions qualitatively are comparable transactions, in 

that the acquired companies operated similar businesses to Ramtron, the meager number 

of data points and the range of multiples indicate that this valuation approach is of 

questionable reliability in this instance. The EV/LTM multiple, for example, yields 

synergy-adjusted per share values of $2.74 to $6.13, a range of $3.39, which exceeds the 

Merger price of $3.10.

159

 The EV/NTM multiple suggests equity values of $2.72 to 

$4.55, a spread of $1.83.160 By contrast, the EV/NTM+1 multiple produces a tighter

range of $3.27 to $4.53. 

I see little justification for Clarke‘s simple averaging method, particularly with 

only two data points. His comparable transactions approach implies per share values 

ranging anywhere from $2.72 to $6.13. Two of the multiples have high-low ranges 

exceeding Ramtron‘s unaffected stock price. I am not convinced it is productive to 

utilize a method that implies Ramtron‘s fair value is somewhere between 88% and 198% 

of the deal price.161 Also, the EV/NTM and EV/NTM+1 multiples rely on the 

 

159 This calculation is derived by applying the comparable transaction multiples to 

Ramtron‘s financials, subtracting $7.5 million, discounting by 13%, and then 

dividing by the number of shares, which I assume to be Clarke‘s figure of 

35,528,425. Jarrell contends that the latter figure understates the number of shares 

by about four million units because of restricted stock and stock options.

160 These numbers are inconsequentially different from Jarrell‘s calculations. The 

deviation seemingly results from his rounding of Clarke‘s determination of shares 

outstanding to 35,500,000. 

161 Jarrell presents a colorable argument that Virage is not, in fact, a comparable 

transaction. If correct, that provides yet another reason that the comparable 

transaction methodology is not reliable here, but I need not decide that issue. If 
55

Management Projections, which I already have concluded are unreliable. Finally, Clarke 

himself attributed minimal weight to this approach—only one-fifth of his conclusion. 

For all of these reasons, I conclude that Petitioner has not satisfied its burden of proving 

that the comparable transactions approach provides a reliable indication of Ramtron‘s fair 

value.

C. The Transaction Price Provides the Best Evidence of Fair Value

A DCF analysis attempts to value a company by looking within the company,

extrapolating its financials into the future, and then discounting these cash flows to 

present value. A comparables approach instead looks outside the company and attempts 

to value it by market analogy. The former method is only useful to the extent its inputs 

are reliable; the latter is helpful only to the extent actual comparables exist. Neither 

approach yields a reliable measure of fair value in this case. Instead, I conclude that the

Merger price offers the best indication of fair value. 

A merger price does not necessarily represent the fair value of a company, as the 

term ―fair value‖ is interpreted under 8 Del. C. § 262. For example, in a short-form 

merger under Section 253, the merger price is set unilaterally by the controlling 

stockholder; the minority stockholders are forced out of the company and left with 

appraisal as their sole remedy. To presume that the merger price represented fair value in 

such a situation would leave the minority stockholders effectively without the remedy

 

Virage is not comparable, the Court would be left attempting to value Ramtron on 

the highly questionable basis of a single allegedly comparable transaction. 
56

offered by Section 262 of an independent analysis of a company‘s fair value. In 2010, 

the Delaware Supreme Court in Golden Telecom, Inc. v. Global GT LP162 explicitly 

rejected the argument that this Court should ―defer‖ to the merger price. Indeed, the 

Supreme Court concluded that such deference would be contrary to the statutory 

language of Section 262, which requires consideration of ―all relevant factors‖ in 

determining a company‘s fair value.163

Nevertheless, in the situation of a proper transactional process likely to have 

resulted in an accurate valuation of an acquired corporation, this Court has looked to the 

merger price as evidence of fair value and, on occasion, given that metric one-hundred 

percent weight.164 In an oft-quoted passage, then-Vice Chancellor Jacobs wrote: ―The 

fact that a transaction price was forged in the crucible of objective market reality (as 

distinguished from the unavoidably subjective thought process of a valuation expert) is 

viewed as strong evidence that the price is fair.‖165 Similarly, Chief Justice Strine, then 

writing as a Vice Chancellor, noted: ―[O]ur case law recognizes that when there is an 

 

162 11 A.3d 214 (Del. 2010).

163 Id. at 217-18.

164 In re Appraisal of Ancestry.com, Inc., 2015 WL 399726 (holding that the merger 

price was the most reliable indication of fair value and performing confirmatory 

DCF analysis); Huff Fund Inv. P’ship, 2013 WL 5878807 (finding the merger 

price to be the best indication of fair value in light of the lack of other reliable 

methods); The Union Illinois 1995 Inv. Ltd. P’ship v. Union Fin. Gp., Ltd., 847 

A.2d 340 (Del. Ch. Jan. 5, 2004) (concluding that the merger price offered the best 

indication of fair value and also performing a confirmatory DCF analysis).

165 Van de Walle v. Unimation, Inc., 1991 WL 29303, at *17 (Del. Ch. Mar. 7, 1991).
57

open opportunity to buy a company, the resulting market price is reliable evidence of fair 

value.‖166 The inquiry here is whether the Merger process resulted in a price indicative of 

Ramtron‘s fair value or, as the parties have framed it, whether there was a ―competitive 

and fair auction‖167 for Ramtron.

At the outset, I note that I am not aware of any case holding that a multi-bidder

auction of a company is a prerequisite to finding that the merger price is a reliable 

indicator of fair value. Here, unlike in Union Illinois or Huff Fund, only one company, 

Cypress, made a bid. This case also differs in that the Merger was a hostile deal. As 

detailed below, however, I conclude that ―the process by which [the Company] was 

marketed to potential buyers was thorough, effective, and free from any spectre of selfinterest or disloyalty,‖

168 and that the resulting price accordingly provides a reliable 

indication of Ramtron‘s fair value.

Ramtron could, and repeatedly did, reject Cypress‘ overtures. Simultaneously, 

Ramtron actively solicited every buyer it believed could be interested in a transaction. 

The Company provided several of those potential buyers with the much-vaunted 

Management Projections. No one bid. LongPath contends that the lack of other bidders 

indicates a flawed process. I disagree. Any impediments to a higher bid resulted from 

Ramtron‘s operative reality, not shortcomings of the Merger process. 

 

166 Union Illinois, 847 A.2d at 357.

167 Id. at 358.

168 Huff Fund Inv. P’ship, 2013 WL 5878807, at *13.
58

1. TI and Ramtron’s operative reality

Much already has been said about Ramtron‘s operative reality as of the Merger. 

Petitioner focuses on one particular factor that it contends irredeemably corrupted the 

sales process: Ramtron‘s foundry relationship with TI. Under Ramtron‘s manufacturing 

agreement with TI, Ramtron was guaranteed three additional years of production if TI 

terminated the agreement.169 But, in the event Ramtron experienced a change in control, 

TI had the right to terminate the agreement upon ninety days notice.170 LongPath argues 

that this change-in-control provision deterred prospective bidders. I reject this contention 

as contrary to the evidence.

The parties do not dispute that Cypress began preparing for its hostile bid well in 

advance. Part of that diligence involved predicting potential interlopers. Another aspect 

of Cypress‘ preparation involved essentially seeking TI‘s blessing for its potential bid. 

Because of the change-in-control provisions, Cypress sought to get some form of 

assurance from TI in advance of issuing its bear hug letter that TI would not exercise that 

right in relation to an acquisition by Cypress. Rodgers testified that he called TI‘s 

president to discuss a potential acquisition of Ramtron. In that regard, Cypress offered to 

avoid competing with one of TI‘s F-RAM products if TI agreed not to terminate the 

foundry relationship with Ramtron. Cypress never received a contract or other written 

 

169 JX 322 (TI Mfg. Agreement); JX 324 (TI Mfg. Agreement Amendment No. 2) 

§ 13.1.

170 JX 322 § 14.8(b).
59

agreement from TI—in fact, it appears that TI never explicitly agreed to support Cypress‘ 

bid. Cypress did receive, however, enough of an informal assurance that it deemed the 

risk of proceeding with the acquisition acceptable.171

As Petitioner emphasizes, Rodgers began discussing this issue with TI in March 

2011, over a year before Cypress‘ bid for Ramtron.172 Even so, the record is clear that 

Cypress never obtained a contractual commitment from TI. In an undated internal 

Cypress presentation analyzing the potential bid for Ramtron, the possibility of TI 

dishonoring its commitment is listed as a low risk, but Cypress (twice) listed the lack of 

TI support as a major risk to any potential deal.173

LongPath argues that Cypress had an unfair tactical advantage and that other 

bidders were unlikely to get TI‘s support. This appears to be nothing but speculation. 

Ramtron‘s relationship with TI was part of its operative reality. A Cypress planning 

document, titled ―Potential Interlopers,‖ listed five such plausible interlopers. For three 

of them, Cypress predicted that TI would not extend foundry support because those 

 

171 Tr. 287-90; id. at 289 (Rodgers: ―They explicitly refused to say  ̳we will support 

you‘ to the point that I didn‘t even try to get them to sign a document, but my 

inference was that they wouldn‘t harm us if we didn‘t attack them.‖).

172 JX 320.

173 JX 236 at 7. Because the presentation includes actual numbers for 2011, I infer 

that it must be from sometime in 2012.
60

companies directly competed with TI.174 A different document predicted the same as to a 

sixth possible interloper.175

I find these predictions and Petitioner‘s reliance upon them somewhat puzzling. 

Even though Cypress offered not to encroach on one specific TI product line, ―low power 

microcontrollers,‖176 in order to get an informal assurance that the manufacturing 

agreement would continue, the uncontradicted evidence shows that TI and Cypress 

directly competed in several markets and that the two companies had significant bad 

blood between them as a result of two previous intellectual property lawsuits.177 Thus, 

applying the reasoning underlying Cypress‘ advisor‘s predictions, TI likely would not 

have extended foundry services to Cypress either. But, TI did make at least a nonbinding 

commitment to continue foundry services for Cypress. 

Petitioner has not shown that any other company that wanted to acquire Ramtron 

was in a worse position than Cypress in terms of getting TI‘s assent. Indeed, some may 

 

174 JX 67.

175 JX 65.

176 Tr. 287 (Rodgers).

177 Id. at 286 (Rodgers: ―They‘re a company with many divisions, like us, and they 

compete broadly in the market.‖); id. at 287 (―TI and Cypress have a history of 

conflict, and they sued us twice about 15 years ago. We won both trials, but 

there‘s not good blood.‖); id. at 237 (Kaszubinski: testifying that TI and Cypress 

competed); id. at 389-90 (Buss: ―So the challenge for us is that TI does not like 

Cypress. TI and T.J. [Rodgers] do not get along. . . . I believe he had been in two 

prior lawsuits with them prior to my tenure, and I think he beat them both times. 

So there is a lot of animosity between the two companies, and it was the number 

one issue we wrestled with.‖). 
61

have been better positioned than Cypress. Construed most favorably to LongPath, all 

bidders were in the same boat as Cypress vis-à-vis TI. Ramtron‘s manufacturing 

agreement with TI simply was part of the Company‘s operative reality at the time of the 

Merger.

Furthermore, there is no evidence that the change-in-control provisions in the TI 

manufacturing agreement actually deterred any of the potential bidders.178 Ramtron 

apparently proceeded the furthest in discussing alternative transactions with three 

companies: Atmel Corp., SMART Modular, and ROHM. Nothing suggests that the TI 

agreement caused any of those companies to back out. Davenport testified that SMART

Modular was ―very hesitant due to our supply-side cost structure and the tenuousness of 

our supply‖ and also did not like the Company‘s ―sole sourcing.‖179 Atmel similarly 

declined because of Ramtron‘s ―cost structure [and] in particular our wafer supply, 

[which] they were very, very concerned about.‖180 ROHM seems to have been 

contemplating a minority investment, discussed in the next Subsection, which would not 

have implicated the TI concerns. In short, Petitioner has not demonstrated that the 

change-in-control provisions in the manufacturing agreement with TI materially impaired 

Ramtron‘s sales process. Instead, Ramtron‘s sole or primary reliance on TI as its foundry 

was part of the Company‘s operative reality.

 

178 Id. at 65 (Richards); id. at 202 (Davenport).

179 Id. at 201.

180 Id.
62

2. Ramtron tries to sell itself to anyone but Cypress

Ramtron authorized Needham, its financial advisor, to market the Company to 

other potential acquirers and explore strategic alternatives. According to an August 30, 

2012 Needham presentation, Needham had: (1) contacted twenty-four third parties, 

including Cypress; (2) sent non-disclosure agreements (―NDAs‖) to twelve of those 

entities, again including Cypress; (3) received executed NDAs from six interested parties, 

which did not include Cypress; and (4) remained in discussions with two companies other 

than Cypress.181 This market canvass reveals that six companies were intrigued enough 

to enter into NDAs. It appears that those companies received or at least had access to 

Ramtron‘s Management Projections.182 In addition, by August, Ramtron had announced 

its new manufacturing agreement with ROHM. Yet, despite this sales effort, not one 

company besides Cypress ever made a firm bid for Ramtron.

SMART Modular and Atmel were two of the companies with which talks 

proceeded the furthest. As noted, both companies declined to pursue a transaction 

because of what they viewed as problems with Ramtron‘s cost structure. The evidence

does not reveal why each and every other company declined to bid for Ramtron. At least 

 

181 JX 125 at 8. 

182 The Management Projections were in the Company‘s data room. E.g., JX 84. 

Needham‘s call log shows that five companies who had signed NDAs accessed the 

data room, though one company that executed an NDA is missing from that log. 

JX 88. 
63

one that executed an NDA saw no synergies in the transaction.183 A second did not see 

the acquisition fitting with the potential bidder‘s strategic priorities.184 Another that 

apparently did have familiarity with Ramtron‘s technology was advised by its engineers

not to move forward.185 That company was sent, but did not sign, an NDA. 

Not one of the specific explanations in the record relates to TI. Instead, what 

evidence there is suggests that these other companies did not see value in Ramtron 

exceeding Cypress‘ bid. The importance of this point is amplified by the fact that 

Needham‘s call log indicates that the NDAs all were executed in late June,186 when 

Cypress‘ bid was only $2.68 a share. According to Petitioner‘s position in this litigation, 

at that point in time, the Company was being undervalued by $2.28. Ramtron‘s hostile 

bid caused a significant spike in trading volume, as revealed by Needham‘s stock price 

analyses.187 Aside from the prospective purchasers that Needham contacted, therefore,

the fact that Ramtron was in play was known in the market. Purely financial purchasers

theoretically could have stepped in and made unsolicited bids and, according to 

LongPath‘s position in this litigation, snatched up Ramtron at a fire sale price. None did. 

 

183 JX 114.

184 JX 70.

185 JX 76.

186 JX 88. 

187 JX 125.
64

Indeed, no one even bid, including those with inside information, even when Cypress‘ 

offer was $0.42 below the final Merger price. 

Petitioner focuses at length on Ramtron‘s discussions with ROHM. On July 17, 

2012, Ramtron‘s management proposed two alternative transactions to ROHM: (1) a 

purchase of seven million shares of Ramtron common stock at $3.50 per share together 

with a board seat; or (2) seven million shares of Ramtron convertible preferred stock at 

$4.00 per share and a board seat.

188

 Three days later, on July 20, Ramtron and ROHM 

announced their new manufacturing agreement.189 ROHM apparently also was interested 

in the potential purchase of Ramtron‘s common stock and, on August 11, 2012, 

communicated to the Company that any such purchase would be at $3.00 per share.190 

According to Petitioner, ROHM‘s interest in a minority investment at a price 

slightly below the deal price indicates that the Merger price undervalued Ramtron. If 

ROHM in fact had made such an investment, I might be inclined to agree.

191

 But, even in 

its email countering at $3.00, ROHM explicitly stated the following: 

Actually, one of our concerns at this time is the legal and 

financial risk for purchasing stocks of a public company with 

 

188 JX 90.

189 JS ¶ 5.

190 JX 109. 

191 Clarke‘s report, for example, suggested that the average acquisition premium in 

the semiconductor industry is about 30%, with roughly half of that amount 

attributable to a control premium and the remainder attributable to synergies. 

Clarke Rpt. 56. An additional 15% on top of $3.00 would imply a minimum 

acquisition price of $3.45, exclusive of synergies.
65

a price above the market price. Since we have to justify the 

purchasing price to achieve the accountability to our 

shareholders, we have to seek profit that can make up for the 

paid premium. And we have to be careful to decide the 

purchase price in order to avoid impairment loss of assets.192

ROHM itself, it seems, was concerned with justifying the above-market premium. 

Perhaps, because of the manufacturing agreement between it and Ramtron, ROHM might 

have been able to exploit synergies between the two companies or otherwise unlock value 

in Ramtron not available to other bidders. Ultimately, however, ROHM backed away 

from pursuing a deal for Ramtron at the end of August. Citing ―growing apprehension in 

ROHM‘s own business environment,‖ ROHM determined that it was ―not in a position to 

make an investment under present business outlook.‖193 

3. Ramtron extracts a substantial premium from Cypress

Finally, LongPath criticizes Cypress‘ hostile approach, arguing that Cypress 

pounded Ramtron into submission at a below-market rate. I already have found that, to 

the extent Cypress‘ hostile bid negatively altered Ramtron‘s performance, such effects 

were dwarfed by Ramtron‘s own business problems, which included channel stuffing 

earlier in the year. Those flaws are part of Ramtron‘s operative reality. On the other 

hand, there is support in the case law for disregarding temporary distortions in 

determining a company‘s fair value.194 In theory, then, it could be acceptable to back out 

any negative effects caused by Cypress‘ hostile offer. The parties, however, have offered 

 

192 JX 109.

193 JX 126.
66

no practical way to quantify those effects, particularly as against the larger effects from 

Ramtron‘s own business problems.

In that regard, there is no evidence that Cypress‘ hostile approach hampered the 

ability of other companies to bid for Ramtron or otherwise affected the Merger process. 

Only one company contacted by Needham stated that it did not wish to bid against 

Cypress.195 By contrast, six other companies went so far as to execute NDAs. Even if 

Cypress was attempting to wear Ramtron down,196 Cypress had every right to do so and 

there is no evidence that it acted improperly in this regard. Furthermore, the history of 

the Merger runs contrary to LongPath‘s argument. Ramtron‘s Board had the ability to 

say no to Cypress and repeatedly did so. The Board advised Ramtron‘s stockholders on 

several occasions not to tender into Cypress‘ bid and, over the same time period, Cypress 

raised its bid five separate times. The price Cypress ultimately paid—which was 

negotiated by the Ramtron Board and Cypress—was 25% higher than Cypress‘ starting 

offer.

4. Conclusion

The Merger resulted from Cypress‘ hostile bid. Cypress spent three months 

attempting to acquire Ramtron, during which time the Company actively shopped itself to 

other conceivable buyers, several of which indicated serious interest. None of those 

 

194 See Glassman v. Unocal Exploration Corp., 777 A.2d 242, 248 (Del. 2001).

195 JX 88.

196 See JX 89 (―Wear them down and wait is working.‖).
67

potential alternative buyers made a firm offer. Cypress, however, repeatedly raised its 

price until it and Ramtron‘s Board agreed on final Merger price of $3.10 per share. This

lengthy, publicized process was thorough and gives me confidence that, if Ramtron could 

have commanded a higher value, it would have. ―For me (as a law-trained judge) to 

second-guess the price that resulted from that process involves an exercise in hubris and, 

at best, reasoned guess work.‖197 As such, I conclude that the Merger price is a reliable 

indication of Ramtron‘s fair value.

D. Transaction Price Less Synergies

Thus far, I have concluded that the Management Projections are unreliable, 

making the use of a DCF inappropriate. Additionally, the parties agree that there are no 

comparable companies and I concur with Respondent that the comparable transactions 

approach does not provide a reliable indication of fair value here. By contrast, the 

Merger process was thorough and supports my reliance on the Merger price as an 

indication of Ramtron‘s fair value. In the absence of alternative methodologies, I weigh 

the Merger price at 100% in determining the fair value of Petitioner‘s shares. 

In an appraisal action, however, it is inappropriate to include merger-specific 

value. Accordingly, I must exclude from the $3.10 Merger price any portion of that 

amount attributable to Cypress-specific synergies, as opposed to Ramtron‘s value as a 

 

197 Union Illinois, 847 A.2d at 359. 
68

going concern.198 Respondent argues that the synergies amount to $0.34 per share. 

Petitioner contends that the net synergies are only $0.03.

Preliminarily, I reject LongPath‘s contention that synergies should be subtracted 

not from the Merger price, but instead from the value that Cypress attributed to Ramtron, 

which, according to Petitioner, is between $3.90 and $5.44. Those valuations estimated 

Ramtron‘s worth as a division of Cypress. Petitioner‘s requested approach is contrary to 

the language of Section 262, which commands that I ―determine the fair value of the 

shares exclusive of any element of value arising from the accomplishment or expectation 

of the merger or consolidation.‖199 There is no basis to deduct synergies from the 

idiosyncratic value attributed to a company by its purchaser, because it is not clear that 

value would provide insight into the fair value of the target company as a going concern. 

Instead, the proper way of applying a merger-price-less-synergies approach is to 

determine the value paid for a company and then subtract that portion of the purchase

price representing synergies.

200

As to the synergies in this transaction, I find Respondent‘s argument that over 

10% of the transaction price represented synergies to be without merit. Jarrell first 

 

198 Huff Fund, 2014 WL 2042797, at *2. 

199 8 Del. C. § 262(h) (emphasis added).

200 Cf. Huff Fund, 2014 WL 2042797, at *5 (providing the example of the urban 

cornfield auction and the eccentric farmer, and noting that, ―In an auction setting, 

it makes little sense to determine whether a bid incorporates information about the 

value of certain opportunities by considering only the idiosyncratic weight 

attached to that information by any particular bidder, even the winning bidder‖).
69

provided a market-wide analysis of the premia paid by financial versus strategic buyers 

and from this approach concluded that average synergies could be removed from the 

purchase price by applying the ratio of the average financial buyers‘ premium to the

average strategic buyers‘ premium, i.e., effectively multiplying the Merger price by 0.73, 

which results in a fair value of $2.75.201 

This general data, however, does not tell me anything about this specific

transaction, which must be the focus in a Section 262 action. With respect to Cypressspecific synergies, Jarrell compared the Management Projections to a set of Cypress 

projections202 and quantified the cost savings, which Jarrell determined to be $0.69 per 

share. He then assumed that Ramtron‘s stockholders captured between 25% and 75% of 

these synergies and took the midpoint of those calculations, resulting in a fair value of

$2.76.203 In addition to its back-of-the-envelope feel, this approach focuses solely on cost 

savings, which are positive synergies, and neglects the possibility of negative synergies, 

which Clarke asserts would exist here.

204

Although Clarke rejected the transaction-price-less-synergies approach, he opined 

that negative revenue synergies and transaction costs would have to be added back to any 

value based on Jarrell‘s estimate of synergies. I find this approach to be reasonable and 

 

201 Jarrell Rpt. 43-44.

202 JX 174.

203 Jarrell Rpt. 46.

204 JX 217 (Clarke Rebuttal Rpt.) at 26-27. 
70

supported by the record. The testimony at trial indicates that Cypress expected

significant negative synergies from the Ramtron acquisition.205 While Petitioner‘s 

approach may understate the net synergies, I find that it better conforms to the evidence 

adduced at trial than Ramtron‘s position. Accordingly, I adopt LongPath‘s approach to 

synergies and exclude $0.03 from the Merger price. This results in a fair value 

determination of $3.07 per share.

E. Reality Checks 

As a final step, I consider it appropriate to touch briefly on some of the ―real 

world‖ evidence that Petitioner contends undermines the Merger price as a reliable 

indicator of fair value. Some of these items are entitled to zero weight. Balzer, for 

example, testified at his deposition that he told Cypress at the time of its nonpublic offer 

in 2011 that he believed Ramtron‘s stock would be worth $6 to $8 ―several years out.‖206 

This speculation, of course, is not informative as to what Ramtron was worth at the time 

of the Merger. Similarly, Ramtron‘s Chairman of the Board testified that he ―personally 

would have paid more than $3.10.‖207 The usefulness of a transaction price, however, is 

that ―buyers with a profit motive [are] able to assess [company-specific] factors for 

themselves and to use those assessments to make bids with actual money behind 

 

205 Tr. 358-61 (Rodgers: testifying about negative synergies in the range of ten to 

fifteen percent of revenue); id. at 268-70 (Kaszubinski: same). 

206 Balzer Dep. 19.

207 JX 246 at 76.
71

them.‖208 By contrast, hypothetical statements about how much money someone 

allegedly would have paid, if they actually had the money to do so, which they apparently 

did not, are significantly less probative. 

Similarly, I give no weight to the $4 target trading price Merriman Capital 

announced in January 2012,209 and reiterated in April 2012.210 By late July, Merriman 

Capital had pulled its target price and admitted it could not model Ramtron accurately.211 

And, as already discussed, I do not find informative the fact that Cypress‘ internal 

documents suggest a value for Ramtron above the deal price; those documents model 

Ramtron as a division of Cypress and are not indicative of the fair value of Ramtron as a

stand-alone company.

The one factor that does cause me some pause, however, is the ROHM potential

investment. The fact that ROHM apparently was seriously considering a minority equity 

investment at $3.00 per share casts some doubt on the Merger price of $3.10. Ultimately, 

however, ROHM did not make this investment and, in fact, expressed serious concern 

about paying an above-market price for Ramtron stock. Because ROHM had extensive 

information about Ramtron and ultimately decided not to pursue the minority investment, 

I discount its importance. ROHM made exactly as many actual bids as the rest of the 

 

208 Union Illinois, 847 A.2d at 359.

209 JX 38.

210 JX 48.

211 JX 97.
72

market: zero. In that regard, the ROHM equity ―investment‖ is simply another nonevent.

Indeed, I suspect that, rather than the Merger price being low, it was more likely 

that the ROHM proposal was inexplicably high. Recall, for example, that, in 2011, long 

before Cypress made its public offer, Ramtron executed a secondary public offering in 

which it diluted its equity holders and sold about 20% of its shares for $2.00 each, with a 

net to itself of $1.79. By July 2012, based on the findings in this Memorandum Opinion, 

Ramtron‘s financial condition was no better than it was when it made the secondary 

public offering. For these reasons, I conclude that the ROHM investment, which never 

actually occurred, does not cast doubt on the Merger price as a reliable indicator of fair 

value.

IV. CONCLUSION

For the foregoing reasons, I determine the fair value of Ramtron as of the Merger 

date to be $3.07 per share. Counsel for Petitioner shall submit, on notice, an appropriate 

final order to that effect, including provisions for pre- and post-judgment interest.