IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
LAUREL GONSALVES, 11
Petitioner, )1
V . 1 Civil Action No. 8474
1 ~ r,.-xi
STRAIGHT ARROW 1 -
5
PUBLISHERS, INC., )
a Delaware corporation, >1 .i
$""`>
Respondent. 1 c
MEMORANDUM OPINION
Date Decided: September lb,2002
Kevin G. Abrams, Thomas A. Beck, and Russell C. Silberglied, of
RICHARDS, LAYTON & FINGER, Wilniington, Delaware, Attorneys for
Petitioner.
Steven J. Rothschild and Lorin M. Ho&man of SKADDEN, ARPS,
SLATE, MEAGHER & FLOM LLP, Wilmington, Delaware, and Joseph M.
Asher, of SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP, of New
York, New York, Attorneys for Respondent.
CHANDLER, Chancellor
This is an appraisal action in which the Court is asked to determine the fair
value of 2,000 shares of a publishing company. After two appeals to the Supreme
Court and following the second remand, this Court enlisted the assistance of a
neutral expert with respect to certain outstanding issues. Exceptions have been
filed to the expert's final report, and this is the Court's opinion regarding those
SNIPPETS:
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
MEMORANDUM OPINION
Kevin G. Abrams, Thomas A. Beck, and Russell C. Silberglied, of RICHARDS, LAYTON & FINGER,
CHANDLER, Chancellor
This is an appraisal action in which the Court is asked to determine the fair
After two appeals to the Supreme
neutral expert with respect to certain outstanding issues.
Exceptions have been
On January 8, 1986, SAP Holding Company, Inc. was merged with and into
Gonsalves declined to accept the merger consideration for her 2,000 shares of SAP
common stock and brought this action pursuant to 8 Del.
' Gonsalves v. Straight Arrow Publishers, Inc., 793 A.2d 312 (Del.
(the "Remand Opinion").
The Supreme Court found that Chancellor Allen's either-or approach was at odds with 5 262's
affecting the value of the enterprise on the date of the MergerTg The Court held
cash, and an explanation for the form of interest awarded.'
I will not address Gonsalves' exceptions to the Final Report directed at the appropriateness
comparable companies.
I5 No adjustment for impaired marketability will be applied and none was suggested by the
The Supreme Court affirmed the weighted five-year EBIT arrived at in the
respondent company being appraised.
Treatment of Deferred Subscription Income
DSI arises when a magazine's subscribers
between necessary-for-operations cash and excess cash.
52 Furthermore, because the impact of compounding becomes more significant over time, the
SAP'S cost of borrowing and Gonsalves' opportunity cost.
comparison of the alternative prudent investor models provided by the part&'
opportunity cost than using a hypothetical prudent investor model.
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