On March 7, 2018, Vice Chancellor J. Travis Laster of the Delaware Court of Chancery denied a motion to stay or extend discovery filed by an appraisal petitioner in light of Vice Chancellor Laster’s recent ruling in Verition Partners Master Fund Ltd. v. Aruba Networks, Inc. (the subject of a prior post). In re Appraisal of Columbia Pipeline Group, Inc., C.A. No. 12736-VCL (Del. Ch. Mar. 7, 2018). Vice Chancellor Laster rejected petitioners’ assertion that Aruba Networks created a “cloud of uncertainty” about the evidence considered and standards applied in Delaware appraisal proceedings, and held that the Court’s reliance on unaffected market price to determine fair value was in line with the Delaware Supreme Court’s decisions in DFC and Dell.
Petitioners, stockholders in Columbia Pipeline Group, Inc., claim that Columbia Pipeline stockholders received less than fair value for the company’s acquisition by TransCanada Corporation. Petitioners moved for a stay of the case or, alternatively, an extension of time for discovery following the Aruba Networks decision, arguing that Vice Chancellor Laster’s holdings in that case altered the scope and type of evidence needed to be submitted at an appraisal trial and misapplied DFC and Dell. Vice Chancellor Laster explained that Aruba Networks “did not independently break new ground,” but rather strived to implement the decisions in DFC and Dell. Vice Chancellor Laster pointed out that Aruba Networks had simply held that, in that case, the company’s unaffected market price provided the most reliable evidence of fair value under the efficient capital markets hypothesis embraced in Dell.
The Court stated that while the hypothesis provides for “greater deference to stock prices generated by a market exhibiting attributes associated with the premises underlying the hypothesis,” market value has long been endorsed by Delaware courts as a factor to be weighed in assessing fair value. Thus, the Aruba Networks decision did not introduce a new methodology but rather gave a long-standing measure of value dispositive weight in a particular case. Because of this, the Court concluded that nothing warranted a stay or extension of discovery.