## Facts

- G. Heileman Brewing Company acquired Pabst Brewing Company through a two-step transaction: a first-step tender offer followed by a second-step squeeze-out merger.
- In the tender offer, Heileman purchased approximately 5.6 million Pabst shares at $32 per share.
- In the second-step transaction, remaining shares were converted into a $24 subordinated debenture.
- The blended acquisition cost to Heileman was calculated as about $29.50 per share.
- Certain minority shareholders dissented and sought statutory appraisal of their shares under 8 Del. C. § 262.
- Petitioners argued the blended figure understated Pabst’s value and claimed fair value in a range of approximately $45.72 to $51.71 per share.
- Pabst argued fair value was $20 per share and contended the blended deal consideration incorporated a significant control premium.

## Issues

1. What was the “fair value” of Pabst common stock as of the merger effective time under 8 Del. C. § 262.
2. How much weight, if any, should be given to the two-tier transaction pricing (including the blended $29.50 figure) as evidence of fair value.
3. Whether and to what extent deal-related elements such as control premium or merger-specific benefits should be excluded from statutory fair value.

## Decision

- The Court of Chancery determined the fair value of Pabst shares to be $27 per share as of the merger date.
- The court did not adopt petitioners’ proposed valuations or the blended acquisition cost as the appraisal value.
- The court also rejected Pabst’s $20 per-share valuation.
- The appraisal award resulted in a per-share value below the acquirer’s blended cost.
- The court ordered payment at the determined fair value, along with statutory interest as applicable in Delaware appraisal proceedings.

## Legal Principles

- In a Delaware statutory appraisal, the court determines the corporation’s going-concern value as of the merger effective time.
- Statutory fair value excludes elements of value arising from the accomplishment or expectation of the merger, including merger-specific gains and, where supported by the record, components of transaction pricing attributable to control or similar deal-related considerations.
- Deal price and market evidence may be considered as valuation inputs but are not necessarily dispositive; the court may reach a value above or below transaction-derived metrics.
- The Court of Chancery acts as an independent valuer, may reject extreme expert positions, and may adjust valuation analyses and assumptions to reach a value supported by the evidentiary record.

## Conclusion

In a post-merger appraisal under 8 Del. C. § 262 following a two-tier acquisition of Pabst, the Delaware Court of Chancery set fair value at $27 per share, treating transaction pricing as relevant evidence but declining to award the blended deal price where the record supported exclusion of deal-related value such as control or merger-specific components.


Cooper v. Pabst Brewing Co., No. Civ. A. 7244, 1993 WL 208763 (Del. Ch. June 8, 1993)