## Facts

- Technicolor, Inc., a Delaware corporation, suffered declining performance after an unsuccessful expansion strategy, contributing to a depressed stock price in the early 1980s.
- MacAndrews & Forbes Group Inc. (MAF), controlled by Ronald Perelman, pursued acquisition of Technicolor and negotiated with Technicolor’s management.
- Technicolor’s board approved a tender offer at $23 per share; after the tender offer closed on November 30, 1982, MAF became Technicolor’s controlling stockholder.
- During the period between the tender-offer closing and the squeeze-out merger (January 24, 1983), MAF developed, adopted, and implemented business plans for Technicolor, including a program to sell non-core or underperforming assets and an expectation of significant proceeds from those sales.
- On January 24, 1983, MAF’s wholly owned subsidiary merged into Technicolor, cashing out remaining minority stockholders at $23 per share.
- Cede & Co., as record owner for Cinerama, Inc. (beneficial owner), dissented and sought statutory appraisal under 8 Del. C. § 262 to obtain “fair value” rather than the merger price.
- The Court of Chancery found the interim plans and asset-sale strategy were not speculative and had been implemented before the merger, but excluded their value from the appraisal on the theory that the value was attributable to the acquirer and would not exist but for the transaction.

## Issues

1. In a statutory appraisal under 8 Del. C. § 262, must “fair value” include non-speculative value from business plans and strategies developed, adopted, and implemented after the acquirer obtained control by tender offer but before the cash-out merger, when those plans existed as of the merger date?
2. Did the Court of Chancery err by excluding such interim value based on a “majority-acquiror”/proximate-cause approach treating it as value arising from the merger or the acquirer?

## Decision

- The Delaware Supreme Court reversed the Court of Chancery’s appraisal determination and remanded for a new valuation.
- The Court held the Chancery Court committed legal error by excluding non-speculative, implemented interim gains that were part of the corporation’s operative reality as of the merger date.
- The Court rejected the “but for”/proximate-cause framework used to exclude interim value and reaffirmed that the statutory exclusion is limited to value arising from the accomplishment or expectation of the merger.
- On remand, the Court of Chancery was directed to recompute fair value using accepted valuation methods, including the interim value shown to be non-speculative and in place as of the merger date, while excluding speculative merger synergies barred by § 262(h).

## Legal Principles

- In a Delaware appraisal, “fair value” is determined as of the merger date and must reflect the corporation as a going concern based on its operative reality at that time.
- The statutory exclusion in 8 Del. C. § 262(h) removes only “any element of value arising from the accomplishment or expectation of the merger,” not all value that can be traced to the acquirer’s control or actions.
- Under Weinberger, the Court of Chancery must consider “all relevant factors” and may use any valuation techniques generally accepted in the financial community.
- In a two-step takeover (tender offer followed by squeeze-out merger), minority stockholders retain an equity interest during the interim; non-speculative value added during that period and existing at the merger date accrues to all stockholders and must be included in the appraisal.
- Courts may not categorically exclude interim gains through judicially created “majority-acquiror” doctrines or causal tests that are inconsistent with § 262’s text and Weinberger’s valuation framework.

## Conclusion

The Delaware Supreme Court required that appraisal valuations include non-speculative, implemented interim gains that existed as of the merger date in a two-step takeover, rejecting the exclusion of such value based on “but for” causation attributed to the acquirer and remanding for a recalculated fair-value determination consistent with § 262 and Weinberger.


Cede & Co. v. Technicolor, Inc., 684 A.2d 289 (Del. 1996)