ONTI, Inc. v. Integra Bank: The Consideration of the benefits of Merger plans in Appraisals Proceedings

Jeffrey P. Leonard

Abstract

 

In two-step takeover transactions where an acquirer gains a controlling share of a company’s stock and later cashes-out the remaining minority, a question arises if dissenting minority shareholders bring an appraisal action to recover “fair value” under Delaware General Corporation Laws § 262(h).  That question is whether the court should include in the “fair value” determination the value added by an acquirer following the change in majority control of the target corporation but before the minority shareholders are cashed-out.  Delaware case law, in particular Cede & Co. v. Technicolor, Inc., does consider the benefits arising from the acquirer’s new strategic plan when determining “fair value” to be given to the dissenting shareholders in appraisal actions under certain circumstances—a “sharing” rule by which all shareholders “share” in the benefits to accrue from the acquirer’s plans for the corporation.  However, it is uncertain whether this “sharing” rule contributes to the efficient operation of corporations or the takeover of inefficient corporations.

 

I.      Introduction

 

In a two-step takeover, an acquirer usually makes a cash tender offer for a controlling block of shares of the target corporation.  The object of the first step is to obtain a large enough percentage of shares of the target company to assure approval of any merger plan subsequently proposed by the acquirer.[1]  In the second step, the acquirer forces the minority shareholders to give up their shares in the target corporation for cash in a “freeze-out” or “squeeze-out” merger.[2]  The minority shareholders cannot prevent the freeze-out.[3]  However, they can dissent from the acquirer’s offer and bring an appraisal proceeding under state statute in which a court determines the “fair value” of the business and, thus, the consideration the minority shareholders are to receive for their shares.[4]  The Delaware General Corporation Laws § 262(h) provides that:

[T]he Court shall appraise the shares, determining their fair value exclusive of any element of value arising from the accomplishment or expectation of the merger or consolidation . . . .  In determining fair value, the Court shall take into account all relevant factors.[5]

The appraisal proceeding is a limited statutory remedy providing equitable relief for shareholders dissenting from a merger on grounds of inadequacy of the offering price, which affords the dissenters the right to a judicial determination of the “fair value” of their shares.[6]  The only available relief in a § 262 appraisal action is a judgement against the surviving corporation for the fair value of the dissenter’s shares.[7] 

       At first blush, § 262(h) seems straightforward; but the mandate to exclude “any element of value arising from the accomplishment or expectation of the merger” and the mandate to take into account “all relevant factors” in determining “fair value” are in tension.  This tension is especially evident when a court must decide whether to include in its “fair value” calculation the value added by an acquirer following the change in majority control of the target corporation before the minority shareholders are cashed-out.

 

II.    Cede & Co. v. Technicolor, Inc.[8]

 

In Cede & Co. v. Technicolor, Inc., the Delaware Supreme Court first held that minority shareholders in an appraisal proceeding under § 262 have the right to receive part of the gain resulting from a two-step takeover.[9]  That is, the court held that the value added to the company during the interim period—the period between the cash tender offer (i.e., change in majority control) and the subsequent freeze-out of the minority shareholders—“accrues to the benefit of all shareholders and must be included in the appraisal process.”[10]  This decision represented the initial step toward a rule that recognizes that minority shareholders retain an equity stake during both stages of a two-step takeover and, therefore, are entitled to the economic benefits of their equity ownership.[11]

Cede & Co. v. Technicolor, Inc. arose out of an appraisal action brought by the beneficial owner of the minority shares, Cinerama,  in  a cash-out merger of a Delaware corporation, Technicolor, Inc., by an acquirer, MacAndrews & Forbes Group, Inc., (“MAF”).[12]  Prior to any acquisition negotiations, Technicolor’s CEO, Kamerman, has instituted a plan to enter the field of rapid processing of consumer film by establishing a network of stores offering one-hour film developing (“the Kamerman Plan”).[13]  The Kamerman Plan proved to be unsuccessful, and Technicolor reported an eighty percent loss in income.[14]  Subsequently, MAF’s controlling shareholder, Perelman, met with Kamerman to discuss an acquisition of Technicolor by MAF.[15]  In October of 1982, the Technicolor board agreed to the acquisition proposal by MAF.[16]  By November of 1982, MAF had gained control of over 82% of Technicolor’s shares.[17]  In December of the same year, MAF began looking for buyers for several of Technicolor’s divisions; MAF calculated that $ 54 million would be realized from the sale of those Technicolor assets (the “Perelman Plan”).[18]  The merger was accomplished in January of 1983, with Technicolor as the surviving corporation and defendant in the appraisal action.[19] 

Cinerama, as minority shareholders of Technicolor, brought an appraisal action for “fair value” under § 262(h).  The experts for both parties employed a form of discounted cash flow to value Technicolor.[20]  On appeal from the appraisal proceeding, Cinerama contended that the Delaware Court of Chancery erred by refusing to include in the valuation of “fair value” the new business plan, i.e., the Perelman Plan, of the acquirer, which the Court of Chancery found to be “’not speculative but . . . developed, adopted and implemented’ between the date of the merger agreement and the date of the merger.”[21]  The Court of Chancery framed the legal issue as whether, in valuing Technicolor as of January of 1983, the “court should assume the business plan for Technicolor that MAF is said . . . to have had in place at that time [Perelman Plan], or whether a proper valuation is premised upon ignoring such changes as Mr. Perelman had in mind because to the extent they create value they are ‘elements of value arising from the accomplishment or expectation of the merger.’”[22]

Cinerama argued that, as of January 1983, the Perelman Plan—which contemplate the sale of several of Technicolor’s divisions—was governing the operation of Technicolor.[23]  Therefore, the Perelman Plan must govern any expert’s projection of cash flow.[24]  Cinerama offered evidence that Perelman had formulated and implemented the Perelman Plan prior to the merger date.[25]  However, Technicolor contended that the Perelman Plan was not sufficiently defined on the date of the merger to support the factual premise for Cinerama’s expert’s cash flow projections from asset sales.[26]  Therefore, any value attributable to the Perelman Plan must be excluded from the value of Technicolor, as a matter of law,  from the statutory valuation as arising from the expectation of the merger.[27] 

 

A.     At the Court of Chancery

 

The Court of Chancery found that “the record supports the conclusion that MAF intended from the outset to realize by one technique or another the capital value of [one of Technicolor’s divisions] and to terminate that division’s drain on the company’s cash flow. . . . [T]he Perelman Plan was fixed by the merger date.”[28]  However, the chancery court held that the value added to Technicolor by the implementation or expectation of the implementation of the Perelman Plan is not value to which, in an appraisal action, Cinerama is entitled to a pro rata share, but it is value that is excluded from consideration by § 262(h) for value arising from the merger of its expectation.

The Court of Chancery’s decision rested on Weinberger v. UOP, Inc.’s analysis of § 262(h).  The Weinberger court construed § 262(h)—“any element of value arising from the accomplishment or expectant of the merger”—to exclude “[o]nly the speculative elements of value that may arise form the ‘accomplishment or expectation’ of the merger . . .  But elements of future value . . . which are known or susceptible of proof as of the date of the merger and not the product of speculation, may be considered.”[29]  The Court of Chancery superimposed additional language upon Weinberger’s reading of § 262(h): “But elements of future value, including the nature of the enterprise, which are know or susceptible of proof as of the date of the merger and not the product of speculation, may be considered [unless, but for the merger, such elements of future value would not exist].”[30]  By superimposing the bracketed language upon the Weinberger holding, the Court of Chancery reasoned that the valuation process in an appraisal proceeding should be the same irrespective of whether a merger is accomplished in one or two steps.[31]  “In such a [two-step] transaction there will be a period following close [to] the first-step tender offer in which the [majority] acquiror may, as a practical matter, be in a position to influence or change the nature of the corporate business, or to freeze controversial programs until they are reviewed following the second-step merger.”[32]

 

B.     At the Delaware Supreme Court

 

On appeal, the Delaware Supreme Court, in Cede & Co. v. Technicolor, attempted to reconcile the “dual mandates” of § 262(h), which direct the court to determine “fair value” based upon “all relevant factors,” but to exclude “any element of value arising from the accomplishment or expectation of the merger.”[33]  The Court held that the Court of Chancery erred, as a matter of law, by determining the fair value of Technicolor on the date of the merger as it was operating in October 1982 pursuant to the Kamerman Plan, which resulted in an understatement of Technicolor’s fair value in the appraisal action by excluding the value of Technicolor as a going concern under the Perelman Plan.[34]  That is, the law required the Court of Chancery to consider the nonspeculative information about the Perelman Plan.[35]

First, the Court characterized the § 262(h) exclusion of “of any element of value arising from the accomplishment or expectation of the merger” as a narrow one: “[T]he majority may . . . cash-out the minority by a merger without a business purpose, but must pay the dissenters fair value for ‘whatever their loss may be, subject only to the narrow limitation that one can not take speculative effects of the merger into account.’”[36]  This narrow exception in § 262(h) is designed to eliminate the use of pro forma data and projections of a speculative nature relating to the completion of the merger.[37]  The exclusion does not include known elements of value, including those which exist on the date of the merger because of a majority acquirer’s interim action in a two-step cash-out transaction.[38]

Second, the Court stated that the dissenters in an appraisal action are entitled to receive a proportionate share of fair value in the going concern on the date of the merger; the company must be valued as an operating entity.[39]  “In a two-step merger, to the extent that value has been added following a change in majority control before cash-out, it is still value attributable to the going concern, i.e., the extant ‘nature of the enterprise,’ on the date of the merger.”[40]  Therefore, the value added to the going concern by the majority acquirer during the interim period of a two-step merger accrues to the benefit of all shareholders and must be included in the appraisal process.[41]  The Court of Chancery’s decision not to value Technicolor on the date of the merger as a going concern under the Perelman Plan resulted in an understatement of the company’s fair value.  By failing to accord Cinerama the “full proportionate value of its shares in the going concern on the date of the merger, the Court of Chancery [effectively] imposed a penalty upon Cinerama for a lack of control” and allowed Technicolor to “reap a windfall.”[42]

 

III.   ONTI, Inc. v. Integra Bank

 

The Delaware Court of Chancery has recently applied the “sharing” rule formulated in Cede to a appraisal case involving a cash-out merger in ONTI, Inc. v. Integra Bank.[43]  The facts of the case are somewhat complex and are not intuitively presented in the opinion.  Before the cash-out transaction occurred, a company, Onco-Tech, Inc. (“OTI”), was owned sixty percent by Douglas Colkitt (“Colkitt”) and forty percent by minority shareholders.[44]  In August 1995, OTI merged with eight cancer treatment center companies (“Eight Centers”) in a transaction referred to as the Cash-Out Mergers.[45]  ONTI was the surviving corporation in the OTI Cash-Out Mergers, and the Eight Centers were survived by the New Treatment Companies.[46]  Subsequently, the New Treatment Companies merged with Colkitt Oncology Group (“COG”), owned primarily by Colkitt.[47]  In 1996, COG merged with Equivision, a public company owned thirty percent by Colkitt, resulting in another public company, EquiMed (the “EquiMed Transaction”).[48]  Considering the fact that discussions of the EquiMed Transaction were already underway at the time of the Cash-Out Mergers, the court found that the likelihood of the EquiMed Transaction occurring within a relatively short time after the Cash-Out Mergers was high.[49] 

For simplicity’s sake (and in accord with the court’s opinion), the OTI minority shareholders, the party seeking the appraisal, will be referred to as the Counterclaimants, and Colkitt, OTI, EquiMed, and Equivision, and the Treatment Centers will be referred to as the Counterclaim Defendants.  The Counterclaim Defendants brought the action, seeking a declaration that the consideration paid to the Counterclaimants in the Cash-Out Mergers was entirely fair.[50]  The Counterclaimants later filed counterclaims against the Counterclaim Defendants, seeking an appraisal, among other things.[51]

In determining the “fair value” in the appraisal proceeding of the Cash-Out Mergers, one issue was whether the EquiMed Transaction should be considered in the calculation of “fair value” under § 262(h).[52]  The Counterclaim Defendants contended that § 262(h), Cede & Co. v. Technicolor, Inc., and several other Delaware cases require the court in an appraisal action to only consider the value of the company as it existed at the time of the merger, and not its value “in the hands of a potential acquiror, or any other value.”[53]  The Court of Chancery acknowledged that Cede and the other cases do stand for the proposition that a corporation must be valued “as an operating entity by application of traditional value factors, weighted as required, but without regard to post-merger events or other possible business combinations.”[54]  However, the court and the parties agreed that “Cede’s meaning has been hotly debated since it was issued by the Supreme Court” in 1996.[55] 

In the Counterclaim Defendant’s argument that the EquiMed Transaction should be excluded from the court’s determination of “fair value, they cited a discussion among five noted Delaware corporate lawyers regarding the implications of the Cede holding:

 

MR. [DAVID C.] MCBRIDE: Let me ask you this: Would we all agree that if a synergistic non-speculative contract between the acquirer and the target is one that won't occur but for the merger, the value will not be considered in the appraisal?

MR. [JESSE A.] FINKELSTEIN: You could even go so far as to make it conditioned on the merger. Say this becomes effective the moment you become the 100 percent owner.

MR. [A. GILCHRIST] SPARKS: Signed and binding. I would agree with Dave [McBride], that's excludable.

MR. MCBRIDE: Even though the prospect of the contract affects the present value of the present business before the merger. In other words, an investment banker might come in and say this business was worth more because if the merger occurs, this is going to happen.

MR. SPARKS: Yes.

MR. FINKELSTEIN: That ought to be the fair flip side of this strict bright line that we've been talking about in Technicolor. If the fact that it happens a second in time before makes it includable, certainly then having it happen a second afterwards should make it excludable under a statute that excludes "any element of value arising from the accomplishment or expectation of the merger."[56]

The Counterclaim Defendants argued that the EquiMed Transaction should not be considered in the appraisal proceeding because the EquiMed Transaction would not have occurred without the Cash-Out Mergers.[57]  The Court of Chancery stated that the record was not as clear as to whether the EquiMed Transaction would not have occurred without the Cash-Out Mergers.[58]  The court found that that fact was not certain; therefore, the Counterclaim Defendant’s argument did not apply.[59]  The court further stated that, even if the court found that the EquiMed Transaction would not have occurred without the Cash-Out Mergers, Cede does not require that that EquiMed Transaction not be considered in the appraisal.[60]  Cede requires the court to consider

[a]ll “elements of future value, including the nature of the enterprise, which are known or susceptible of proof as of the date of the merger and not the product of speculation”’  Looking at the ownership of the companies involved, I think it is clear that it is “not the product of speculation” that the EquiMed Transaction was effectively in place at the time of the Cash-Out Mergers, as Cede requires.  In fact, the [discussion of the Cede holding by the five Delaware lawyers] relied on by the Counterclaim Defendants in support of their interpretation of Cede actually supports the opposite conclusion.[61]

Next, the Court of Chancery analogized the facts of the case to a hypothetical company that owns “a large cornfield in the middle of Manhattan roughly were something like the Citicorp Center presently sits”[62] found in the same discussion as the conversation among the five Delaware corporate lawyers:

Let’s suppose that you are the minority owner in the company that owns the cornfield and the majority stockholder and the members of the board say to themselves, boy, we really are underutilizing this asset. We ought not utilize this as a cornfield. The company is only selling at about $1 per share. We can buy it at approximately that price and subdivide it or develop it and build buildings on it and sell those buildings or rent those buildings. 

And the majority stockholder says to himself, yes, that’s a great idea. Let’s freeze out the minority. I’m going to capture all of that value for myself. And there’s a freeze-out at a price that values the company by the majority stockholder at a price that reflects nothing but the value of that property as a cornfield. 

I would suggest to you that a valuation of that company as of the date of the merger that doesn’t take into consideration the nonspeculative possibilities of developing this cornfield into something other than a cornfield is not a realistic valuation of the company. The minority shareholders, under those circumstances, are entitled to a valuation that reflects the value of a company that owns a cornfield that can be developed into a major office center.[63]

The court compared the facts of the present case to the hypothetical:

The hypothetical is instructive here.  Colkitt is the majority stockholder, OTI (and later, ONTI) is the company, the Eight Centers are the cornfield, and the plan to develop the cornfield (the Eight Centers) is the plan to merge COG with Equivision . . .  Through his position as chairman of Equivision . . . and his thirty percent ownership of Equivision, Colkitt had the ability to make sure the Cash-Out Mergers occurred.[64]

The court then stated that Cede interprets § 262(h) to require the court to appraise the shares “exclusive of any element of value arising from the accomplishment or expectation of the merger” in such a way as to favor the valuation of the company including the EquiMed transaction.[65]  The court noted that excluding elements of value arising from the accomplishment or expectation of the merger makes some sense in an arm’s-length transaction where the dissenting shareholder is “truly opting out,” but it is misapplied in squeeze-outs where the dissenting shareholder is being expelled and where those who remain may be exploiting asymmetric information.[66]  Thus, the Court of Chancery considered the EquiMed Transaction in its determination of “fair value.”[67]

 

IV.   Analysis

 

       The argument over the proper role for appraisal remedies has focused on corporate efficiency.  Overly generous appraisal remedies for dissenting minority shareholders may deter efficient transactions designed to improve inefficient companies.[68]  However, appraisal remedies that undercompensate the minority may produce both an inefficient allocation of corporate assets and increase the cost of capital to corporations over the long term.[69]  There is an efficient market aspect to the argument against the “sharing” rule adopted in Cede and applied in ONTI.

       Several commentators argue that the appraisal remedy should award the minority shareholders only the value of their shares prior to the time that the new controlling shareholder made its investment.[70]  In the case of “going private” transactions, where former managers effect a leverage buyout (“LBO”) that “freezes out” the public shares, “investment will be “suboptimal” unless the appraisal price is set to allow the majority to capture, on the margin, the value that its investment yields.”[71]  This argument focuses on the deterring effect that the sharing rule will have on market pressure to improve weak companies and thus takeover activity.  Potential acquirers will not undertake efforts to identify companies that they can acquire and improve upon through their efforts unless the acquirers can reap all the returns from those efforts.[72]  The basic argument is that, unless the acquirer can bribe the incumbent control group to transfer control, superior management teams will not be able to replace inferior management teams.[73]  The acquirer—the purchaser of the controlling block of the company’s stock—thinks it can realize greater value from the same assets and is willing to pay a premium for the chance to realize that greater value[74] and is possibly willing to pay a premium to prevent the current shareholders from reaping the benefits of the acquirer’s new strategies.

       However, John C. Coffee,[75] like the Court of Chancery in ONTI, recognized the danger of the exploitation of asymmetric information in change of control transactions if courts do not share the benefits of an acquirer’s plan with dissenting shareholders in appraisal proceedings.[76]  He provided a example in a manager buyout context:  Assume that the managers of a company recognize, based on their access to material nonpublic information, that the company has an opportunity to undertake a “major strategic investment” that will double the company’s value.[77]  The managers elect to structure a leverage buyout that “freezes out” the minority shareholders instead of immediately undertaking the strategic investment of behalf of all their shareholders.[78]  The use of the asymmetric information by the managers in this example represents a form of insider trading, but it is not likely that they will be prosecuted because, by taking the company private, the acquirers eliminate any aftermarket stock price that can demonstrate that material information was withheld from former shareholders.[79]

       There are many conceivable variations on the above example.  At one end of the spectrum, the control group may have no plan or only an vague or indefinite plan before they acquire a controlling block in the company which allows them access to material nonpublic information with which they can further solidify their strategic investment.[80]  At the other end, the control group may have a definite strategic plan in place before they make their initial investment to acquire a controlling block of the company’s stock.[81]  According to Coffee, the paramount question is: “[W]ho has the property right in the information that motivates the control group’s desire to take over the firm and eliminate the noncotrolling shareholders.”[82]  It has been suggested that minority shareholders actually contribute to the investment cost required in a two-step takeover to the extent that the acquirer uses nonpublic information about the target, which is the “property” of all the shareholders.[83]  The acquirer misappropriates wealth from the minority shareholders by “converting ‘property’ that is owned by all of the shareholders into personal gain” by using the proprietary information without sharing the benefits with the minority.[84]

       In a less clear cut, “going private” scenario—where the insider control group recognizes a strategic opportunity to alter the company’s investment or financial policies because of new developments (without misappropriating inside information from the company), but later develops and refines the strategy based on the nonpublic information acquired from the company—the insiders still owe a fiduciary duty to all shareholders to disclose information about any “hidden value” in the company’s assets prior to acquiring a controlling block of the company’s shares.[85]  Coffee sees this situation as requiring the formulation of a rule that promotes one group exploiting a business opportunity that requires elimination of the minority while chilling similar transactions that are likely to involve the exploitation of nonpublic information and the usurpation of business opportunities belonging to the corporation being taken private.  Does the development of the rule initiated by Cede accommodate this viewpoint?  The rule formulated in Cede does not distinguish use of nonpublic information.  It merely requires the court to determine whether subsequent strategic plans were negotiated prior to elimination of the minority shareholders.

       Another commentator views current Delaware law as striking the right balance.  The “sharing” rule adopted in Cede and applied in ONTI—that forces the majority-acquirer to share value added during the interim period after acquisition of a controlling block of the company but before the cash-out of the minority—not only treats the minority shareholders fairly, but also gives acquirers appropriately circumscribed incentives by screening out takeovers in which the expected efficiency gains would not otherwise justify the acquirer’s costs.[86]

       Another argument may be made for the “sharing” rule by analogy to the sale of company assets followed by a liquidating distribution of the proceeds to the shareholders.  In liquidation, the value of the company must be distributed pro rata to all stockholders.[87]  Each outstanding share of common stock is entitled to a pro rata portion of a company’s income stream, whether paid in the form of current dividends or as liquidating distributions.[88]  This basic principal should not be allowed to be circumscribed by the execution of a two-step takeover transaction.[89]  A majority shareholder is entitled to the power of electing a majority of the board of directors and, therefore, to the power of dictating corporate policy, nothing allows him or her to allocate returns on a disproportionate basis.[90]  Whether this analogy properly frames the issue of whether an acquirer must share the benefits of an investment strategy with dissenting shareholders is uncertain in light of the question of who “owns” the value added by the intellectual property which is the investment strategy.  Unfortunately, in two-step merger transactions, the picture is not nearly as clear as it is in liquidating transactions. 

       The rights of the eliminated minority shareholders to the new, unimplemented strategies of the acquirers seems like a slap in the face of American capitalism.  Why should the shareholders who did not fully advance the interests of the existing corporation be able to share in the profits brought by an acquirer’s efforts?  The rule that I formulate is as follows: Non-inside acquirers, who have no duties to the shareholders preexisting their control, should be able to withhold implementation of new investment plans until after the minority is cashed-out and thereby retain the earnings brought by those plans, regardless of whether nonpublic information was utilized during the interim period between the acquisition of control and elimination of the minority.  The acquirer paid a premium to all shareholders to gain the benefit of the use of the company’s nonpublic information.  There is no need for a rule that forces acquirers to blindly take control without crunching the numbers to determine if their new strategic plans will pay out.  On the other hand, inside acquirers, who do owe a duty to the shareholders, such as existing managers or directors who execute a leveraged buyout, should not be able to withhold the benefits of plans formulated with nonpublic information prior to cashing out the minority.  However, if these inside acquirers formulate new strategic plans subsequent to the elimination of the minority, such plans should not benefit the eliminated minority.

 



[1] Victor Brudney & Marvin A. Chirelstein, Fair Share in Corporate Mergers and Takeovers, 88 Harv. L. Rev. 297, 330 (1974).

[2] Recent Cases: Corporate Law – Appraisal Rights – Delaware supreme Court Holds That a Minority Shareholder Is Entitled to Value Added During the Interim Period of a Two-Step Takeover.  --  Cede & Co. v. Technicolor, Inc., 684 A.2d 289 (Del. 1996), 110 Harv. L. Rev. 1940, 1940 n.2 (1997) [hereinafter Appraisal Rights].

[3] Id.

[4] Id.; see also Del. Code Ann. tit. 8, § 262(h) (2000).

[5] Del. Code Ann. tit. 8, § 262(h).

[6] Cede, 684 A.2d at 296.

[7] Cede & Co. v. Technicolor, Inc. 542 A.2d 1182, 1187 (1988).

[8] 684 A.2d 289.

[9] Id. at 298-99.

[10] Id. at 299.

[11] Appraisal Rights, supra note , at 1940.

[12] Cede 684 A.2d at 290.

[13] Id. at 292.

[14] Id. at 292.

[15] Id. at 292.

[16] Id. at 293.

[17] Id. at 293.

[18] Id. at 293.

[19] Id. at 293l.

[20] Id. at 294.

[21] Id. at 290.

[22] Id. at 294; see also Del. Code Ann. tit. 8, § 262(h).  Cinerama’s expert calculated the fair value of Technicolor to be $62.75 as of January 1983.  Technicolor’s expert calculated the fair value of Technicolor to be $13.14 per share.  Cede, 684 A.2d at 294 n.3.

[23] Cede, 684 A.2d at 294.

[24] Id. at 294.

[25] Id.

[26] Id. at 295.

[27] Id.

[28] Id.

[29] Id. (quoting Weinberger v. UOP, Inc., 457 A.2d 701, 713 (1983)).

[30] Id.

[31] Id.

[32] Id. at 296.

[33] Id. at 297.

[34] Id. at 299.

[35] Id. at 300.

[36] Id. at 297 (quoting Weinberger v. UOP, Inc., 457 A.2d 701, 714 (1983) (emphasis added)).

[37] Id. at 299.

[38] Id.

[39] Id. at 298.

[40] Id.

[41] Id. at 298-99.

[42] Id. at 299 (citing Cavalier Oil Corp. v. Harris, 564 A.2d 1137, 1145 (1989)).

[43] 751 A.2d 904 (1999).

[44] Id. at 906.

[45] Id.

[46] Id. at 907

[47] Id.

[48] Id.

[49] Id. at 914.

[50] Id. at 907.

[51] Id.

[52] Id. at 908-09.

[53] Id. at 909.  The Counterclaim Defendants cited Chicago Corp. v. Munds, 172 A. 452 (1934); Tri-Continental Corp. v. Battye, 74 A.2d 71 (1950); Application of Delaware Racing Assoc., 213 A.2d 203 (1965); Bell v. Kirby Lumber Corp., 413 A.2d 137 (1980); and Cede &Co. v. Technicolor, Inc., 684 A.2d 289 (1996).  ONTI, 751 A.2d at 909.

[54] ONTI, 751 A.2d at 909-10.

[55] Id. at 910.

[56] Symposium: Delaware Appraisals After Cede & Co. v. Technicolor, 17 Bank & Corp. Governance L. Rep. 631, 651-52 (1996) [hereinafter Symposium].

[57] ONTI, 751 A.2d at 908-09.

[58] Id. at 910.

[59] Id.

[60] Id.

[61] Id. (quoting Cede, 684 A.2d at 300).

[62] Id.

                [63] Id. at 910-11 (quoting Symposium, supra note 56, at 638).

[64]Id. at 910.

[65] Id. at 911.

[66] Id. at 911 n.28 (quoting John C. Coffee, Transfers of Control and the Quest for Efficiency: Can Delaware Law Encourage Efficient Transactions While Chilling Inefficient Ones?, 21 Del. J. Corp. L. 359, 418 (1996)).

[67] Coffee, supra note 66, at 411.

[68] Id.

[69] Id. at 407.

[70] See id. at 408; Frank H. Easterbrook &  Daniel R. Fischel, Corporate Control Transactions, 91 Yale L.J. 698, 731 (1982) (contending that those who produce a gain should be allowed to keep it, subject to the constraint that the dissenters to the transaction be “at least as well off as they were before the transaction”); Benjamin Hermalin & Alan Schwartz, Buyouts in Large Companies 25 J. Legal Stud. 351, 360, 364 (June 1996) (arguing that the minority should be entitled only to the “preinvestment market value” of their shares in the context of a subsequent squeeze-out merger).

[71] Coffee, supra note 66, at 408.

[72] Id..

[73] Id. at 410.

[74] Id.

[75] Professor of Law at Columbia University Law School.

[76] Id. at 410-11.

[77] Id. at 411.

[78] Id. at 411.

[79] Id.

[80] Id.

[81] Id.

[82] Id.

[83] Appraisal Rights, supra note 2, at 1943.

[84] Id. at 1944

[85] Coffee, supra note 66, at 411-12.

[86] Appraisal Rights, supra note 2, at 1945.

[87] Brudney & Chirelstein, supra note 1, at 334.

[88] Id.

[89] Id.

[90] Id.