In a
prior post, we discussed valuation methodologies utilized by
the Delaware Court of Chancery. The Court of Chancery
generally utilizes a discounted cash flow methodology in appraisal
proceedings.
However, Delaware courts have incorporated other elements of
future value in their valuation processes, so long as these
elements were not "speculative." For example, the court
in Cede & Co. v. Technicolor, Inc., 684 A.2d 289
(Del. 1996) held that the breakup plan of Technicolor could be used
to calculate the value of Technicolor stock. Ultimately,
including this future potential value of the breakup plan led to
shares being valued at approximately 24% greater than the tender
offer price.
