A recent post-trial memorandum opinion issued July 28 in Fox v. CDx Holdings, C.A. No. 8031-VCL (Del. Ch. July 28, 2015), highlights the Delaware Court of Chancery’s continuing focus on the integrity of valuation determinations in the context of controller-induced mergers. In CDx, the court evaluated claims brought by a class of the defendant company’s option holders challenging a fair market value determination made as part of a spinoff merger.
The CDx opinion provides an illustrative example of the Court of Chancery’s regular scrutiny of the degree of faithfulness exercised by fiduciaries in adhering to procedural and substantive rigors when valuation determinations are made in the context of a merger, especially where a controller is involved. In addition, though no financial advisers were parties to the case, the decision also follows a line of cases examining the work of third-party financial advisers for indications of undue influence over the outcome.
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