Appraising the Non-Existent: The Delaware Courts' Struggle with Control Premiums
William J. Carney
Emory University School of Law
Milbank, Tweed, Hadley & McCloy
University of Pennsylvania Law Review, Vol. 152, 2003
This paper examines the holdings of the Delaware courts that a control premium must be added to the market value of shares in freeze-out transactions. It finds this result is not required by prior Delaware law. We argue that there is no control premium absent a current transaction in control, and that assumptions of control premia in freeze-outs are simply speculation. Awarding control premia provides a windfall gain for public shareholders, and is contrary to the treatment of public shareholders who receive publicly traded shares in other mergers.
Number of Pages in PDF File: 33
JEL Classification: G34, K22Accepted Paper Series
Date posted: June 2, 2003
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