Litigation Commons^™

The End Of Arbitrage: Recent Chancery Court Decisions Highlight Delaware’S Need To Overturn Transkaryotic, Celia Golod

Emory Law Journal

Appraisal is a legislatively created right that affords a shareholder the ability to seek a judicial ruling on the fair value of their stock when their corporation undergoes a merger that they do not support. While this remedy is intended to protect shareholders from faulty merger negotiating, in the 2010s hedge fund petitioners in Delaware flooded the Delaware Chancery Court to use the remedy to make a profit—a tactic called appraisal arbitrage. While appraisal arbitrage theoretically acts as a back-end market check on controller abuses, appraisal litigation is lengthy and requires court resources. Further, appraisal arbitrage allows hedge fund petitioners, …