Verition Partners Master Fund v. Aruba Networks
Delaware Supreme Court
210 A.3d 128 (2019)
Hewlett-Packard Company (HP) offered to acquire Aruba Networks, Inc. (Aruba) (defendant). Aruba shopped around for other potential bidders and shared confidential company information with HP. After several months of negotiating, both companies agreed that HP would acquire Aruba for $24.67 per share. At that point, the 30-day average price of Aruba’s stock on the open market was $17.13. News about the possible merger was leaked to the public, and Aruba’s share price jumped to $22.24. Aruba then publicly released information that HP had learned already: that Aruba had performed well during the prior quarter. In response, Aruba’s share price went up to $24.81. The merger deal closed approximately four months later. Verition Partners Master Fund Ltd. (Verition) (plaintiff) owned shares of Aruba before the merger. Verition filed an appraisal action, asking the chancery court to independently determine the fair value of its Aruba stock and claiming that the correct value was $32.57. Aruba responded that the stock’s fair value was $19.10, which was the merger price of $24.67 less the estimated synergies that the companies would achieve through the merger. The chancery court ruled that the stock’s fair value was $17.13, which was the stock’s average, unaffected market price before the merger news was leaked. Verition appealed.
Rule of Law
Holding and Reasoning (Per curiam)
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