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Cede & Co. v. Technicolor, Inc.

Supreme Court of Delaware
634 A.2d 345 (1993)



Technicolor, Inc. (defendant) was in serious financial trouble in early 1982. Ron Perelman, controlling shareholder of MacAndrews & Forbes Group, Inc. (MAF), determined that Technicolor would be an attractive takeover candidate for MAF. Technicolor agreed to a two-step merger, in which MAF would first make a cash tender offer and then conduct a cash-out merger with any shareholders who did not accept the tender offer. The tender offer opened in November 1982, and by the end of the month, MAF had acquired 82 percent of Technicolor’s shares. Meanwhile, Perelman had developed a plan for improving Technicolor’s performance, which included selling all of Technicolor’s unprofitable units. Cinerama, Inc. (plaintiff) did not accept the tender offer and dissented from the cash-out merger, which was completed in January 1983. Cinerama sued for an appraisal. The trial court computed an appraisal value which excluded any value created by Perelman’s plans for the new company, on the reasoning that the appraisal should exclude any future value which, but for the merger, would not exist. Cinerama appealed, arguing that Perelman’s plans should be factored in.

Rule of Law


Holding and Reasoning (Holland, J.)

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