Opinion ID: 1497598
Heading Depth: 1
Heading Rank: 24

Heading: Part Three Entire Fairness Determination

Text: Over the course of forty-seven days, the Court of Chancery heard more than forty-one days of live testimony, including twenty-six days of expert testimony. [33] It was ultimately called upon to assess the demeanor and credibility of twenty-two witnesses, four of whom were director defendants. According to the Court of Chancery, its entire fairness determination was based, in part, on its conclusions that: (1) CEO Kamerman consistently sought the highest price that Perelman would pay; (2) Kamerman was better informed about the strengths and weaknesses of Technicolor as a business than anyone else; he was an active and experienced CEO who had designed and implemented a cost reduction program that was very beneficial and knew the businesses in which Technicolor operated; (3) Kamerman and later the board were advised by firms who were among the best in the country; (4) the negotiations lead to a price that was very high when compared to the prior market price of the stock (about a 100% premium over unaffected market price) or when compared to premiums paid in more or less comparable transactions during the period; (5) while the company was not shopped, there is no indication in the record that more money was possible from Mr. Perelman or likely from anyone else; management declined to do an MBO transaction at a higher price and while I did conclude that the deal was probably locked up, if the value of the company at that time was or appeared to be remotely close to the value Cinerama claimed at trial, any lock-up arrangement present would not have created an insuperable financial or legal obstacle to an alternative buyer. Indeed the conclusion that the transaction was probably locked up was logically and actually premised upon the belief that the $23 price was high. Cinerama, 663 A.2d at 1140-41. After considering all of the admissible credible evidence, following a lengthy trial and this Court's remand, the Court of Chancery concluded that the defendants had met their burden of establishing entire fairness: I, of course, desire to accord complete respect to the Supreme Court's conclusion that the director defendants were negligent and insufficiently informed when they resolved to accept the MAF proposal. And I recognize the force of the claim that a process that is uninformed can never be fair to shareholders. Yet recognizing that a single judgment concerning all factors is called for I find myself unable to conclude that the MAF tender offer/merger was not a completely fair transaction. Id. at 1140 (emphasis added). [W]hile I conclude that the process followed by the board in authorizing the corporation to enter into the MAF transaction was flawed in that, as found by the Supreme Court, the board was insufficiently informed to make a judgment worthy of [procedural] presumptive deference, nevertheless considering the whole course of events, including the process that was followed, the price that was achieved and the honest motivation of the board to achieve the most financially beneficial transaction available, I conclude that the defendants have introduced sufficient evidence to support a conclusion that, and I do conclude that, the merger in which plaintiff was cashed out, as well as the tender offer in which MAF acquired the stock interest that enabled MAF to cash out plaintiff were [substantively entirely] fair transactions in all respects to Cinerama. Id. at 1143-44.