Tri-Continental Corp. v. Battye

74 A.2d 71 (1950)

From our private database of 45,900+ case briefs, written and edited by humans—never with AI.

Tri-Continental Corp. v. Battye

Delaware Supreme Court
74 A.2d 71 (1950)

  • Written by Heather Whittemore, JD

Facts

General Shareholdings Corporation (General) was a closed-end investment company with leverage. Approximately 60 percent of General’s assets were pledged to outstanding debt, with the remaining 40 percent applicable to its common stock. Because General was a closed-end, leveraged company, any increase or decrease in the stock market would fall on its common stock. Therefore, the market price of its stock did not necessarily reflect the stock’s net asset value. The difference between General’s net asset value and the market price of its stock was its discount rate. In 1948 General merged into Tri-Continental Corporation (defendant). A group of General shareholders (the opposing shareholders) (plaintiffs) dissented from the merger, seeking to receive fair value for their shares of common stock through an appraisal proceeding. The Delaware Court of Chancery appointed an appraiser, who determined that General’s discount rate was 25 percent. In valuing General, the appraiser considered several factors, including General’s nature, leverage, applicable discount rate, net asset value, market value, and favorable tax situation. The appraiser determined that the asset value of General’s stock was $5.15 per share, and added $0.29 to reflect General’s tax situation, concluding that the fairest asset value was $5.44. The appraiser then factored in the 25 percent discount, ultimately concluding that the fair price of the opposing shareholders’ shares was $4.08. The court of chancery adopted the appraiser’s valuation method except for his application of the fairest asset value. The court of chancery held that the fairest asset value should be factored into the valuation independently of the other factors. Giving a 40 percent weight to the fairest asset value and a 60 percent weight to the valuation reached by the appraiser, the court of chancery determined that the fair value of the opposing shareholders’ shares was $4.62. Tri-Continental appealed, arguing that the appraiser’s valuation method was correct.

Rule of Law

Issue

Holding and Reasoning (Wolcott, J.)

What to do next…

  1. Unlock this case brief with a free (no-commitment) trial membership of Quimbee.

    You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 742,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.

    Unlock this case briefRead our student testimonials
  2. Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.

    Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.

    Learn about our approachRead more about Quimbee

Here's why 742,000 law students have relied on our case briefs:

  • Written by law professors and practitioners, not other law students. 45,900 briefs, keyed to 984 casebooks. Top-notch customer support.
  • The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
  • Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
  • Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.

Access this case brief for FREE

With a 7-day free trial membership
Here's why 742,000 law students have relied on our case briefs:
  • Reliable - written by law professors and practitioners, not other law students
  • The right length and amount of information - includes the facts, issue, rule of law, holding and reasoning, and any concurrences and dissents
  • Access in your class - works on your mobile and tablet
  • 45,900 briefs - keyed to 984 casebooks
  • Uniform format for every case brief
  • Written in plain English - not in legalese and not just repeating the court's language
  • Massive library of related video lessons - and practice questions
  • Top-notch customer support

Access this case brief for FREE

With a 7-day free trial membership