Opinion ID: 1497598
Heading Depth: 1
Heading Rank: 23

Heading: Part Two Fair Price Analysis

Text: In addition to fair dealing, the other major component of the non-bifurcated entire fairness standard is fair price. The Court of Chancery found [n]umerous reliable sources [that] indicate that the $23 per share received constituted the highest value reasonably available to the Technicolor shareholders. Cinerama, 663 A.2d at 1142. First, MAF paid a 109% one-month deal premium over the market price. This constituted the fourth highest premium paid over market price in transactions involving comparably sized companies, according to the Alcar Comparable Deal Analysis performed by the defendants' primary valuation expert. In fact, with regard to sixty-one other transactions, that analysis demonstrated that the price MAF paid was more than double the average fifty-one percent premium paid over market price and represented a premium of 116% relative to Technicolor's market price one month prior to the MAF tender offer. Within Technicolor's industry specifically, the premium over market price MAF paid was the highest for an acquisition in the 1981-84 period, and four times the average premium (26.55%). Second, Technicolor's senior management accepted MAF's bid and declined to pursue a competing buy-out. Third, the Court of Chancery found the fact that major shareholders, including Kamerman and Bjorkman who had the greatest insight into the value of the company, sold their stock to MAF at the same price paid to the remaining shareholders also powerfully implies that the price received was fair. Id., at 1143. If Technicolor was worth more than $62 per share, as Cinerama contends, Kamerman (with 128,874 shares) and Bjorkman (with 409,406 shares) would have lost more than $5 million and $16 million respectively by tendering their shares to MAF for $23 per share. Fourth, experts in the marketplace, including Goldman Sachs, indicated explicitly and implicitly that the price was fair. Id. [32] Fifth, the Court of Chancery noted in its original liability opinion that there was no persuasive evidence that Technicolor's private market or public sale value was greater than $23 per share. Id., at 1143-44. Similarly, on remand, the Court of Chancery again noted that Cinerama offered meager [rebuttal] evidence to support a finding that $23 per share constituted an unfair price. Cinerama argues that if Technicolor had been shopped, a cash-rich purchaser would have come forward and offered a higher price. The Court of Chancery concluded, however, that Cinerama had offered no credible evidence to support that proposition in rebuttal to Technicolor's fair price evidence. Accord Rosenblatt v. Getty Oil Co., Del.Supr., 493 A.2d 929 (1985). Cinerama's only direct evidence relating to price fairness came through its valuation expert, John Torkelsen, whose methodology and conclusions the Court of Chancery found to be troubling and too strikingly odd to be accepted. Cinerama, 663 A.2d at 1144. This Court has observed that when it is widely known that some change in control is in the offing and no rival bidders are forthcoming over an extended period of time, that fact is supportive of the board's decision to proceed. Barkan v. Amsted Indus., Inc., Del.Supr., 567 A.2d 1279, 1287 (1989). In Barkan, this Court also noted that various other apparent obstacles have not prevented rival bidders from expressing their interest in acquiring a corporation. Id.; see also Paramount Communications, Inc. v. QVC Network, Inc., Del.Supr., 637 A.2d 34 (1994); Paramount Communications, Inc. v. Time, Inc., Del.Supr., 571 A.2d 1140 (1990). In this case, the record reflects that no rival bidder came forward even though the MAF transaction did not close for several months after it was announced. See Cede II, 634 A.2d at 357-58. The Court of Chancery concluded that the $23 per share offer was the highest value reasonably achievable. Cinerama, 663 A.2d at 1144 (citing Paramount Communications, Inc. v. QVC Network, Inc., Del.Supr., 637 A.2d 34 (1994)). Substantial record evidence supports the Court of Chancery's finding that the $23 deal price was the highest price reasonably available. That conclusion is the result of an orderly and logical deductive process.