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Cede & Co. v. Technicolor, Inc. - 684 A.2d 289 (Del. 1996)


The dissenter in an appraisal action is entitled to receive a proportionate share of fair value in the going concern on the date of the merger, rather than value that is determined on a liquidated basis. Thus, the company must first be valued as an operating entity. In that regard, one of the most important factors to consider is the "nature of the enterprise" that is the subject of the appraisal proceeding.


With the approval of a two step merger from a majority of defendant Technicolor Inc.'s shareholders, MacAndrews & Forbes Group Incorporated ("MAF") merged its wholly-owned subsidiary, Macanfor Corporation ("Macanfor"), into Technicolor. Plaintiffs, the dissenting minority shareholders of Technicolor, sought a valuation of the fair value of their shares. The Court of Chancery of the State of Delaware appraised the fair value of the shares, to which the dissenting stockholders appealed.


Did the trial court properly appraise the fair value of Technicolor, Inc.?




The court held that the trial court's failure to include the added value resulted in an understatement of dissenting stockholder's fair value. It held that the only elements of value that could be excluded from the appraisal were speculative elements that arose from the accomplishment or expectation of the merger. The value added following the change in majority control between the first and second steps of the two step merger was attributable to the going concern on the date of the merger and was not speculative. Thus, the value was required to be included in the appraisal process. The judgment was reversed and remanded 

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