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An attorney for Aruba Networks—a developer of wireless infrastructure—urged the Delaware Supreme Court on Wednesday to uphold a Chancery Court decision that looked to the company’s stock price, and not the agreed-upon merger price, to determine fair value in a $3 billion sale to Hewlett-Packard Co. in 2015.
Aruba attorney's Michael P. Kelly, of McCarter & English, said Vice Chancellor J. Travis Laster went to “great pains” to reconcile his appraisal ruling with a pair of decisions from the state high court, which indicated a strong preference for deal price as the best indicator of fair value in third-party, arm’s-length deals.
Hewlett-Packard agreed to acquire Aruba for about $24 per share, but the Chancery Court said the 30-day average stock price of $17 per share should be the benchmark.
In two previous cases, the state Supreme Court has reversed decisions of the Chancery Court in appraisal cases where the business court looked past the deal price in finding the true measure of value of a company.
Challengers to the deal said HP overpaid for Aruba. The closely watched appeal, argued before the state’s five justices in Delaware, has magnified a deep divide in Delaware’s legal community and is expected to provide guidance on how a firm’s unaffected market price should factor into appraisal cases.
This is a developing story.