## Facts

- DFC Global Corporation, a publicly traded provider of alternative consumer financial services, operated in the United States, United Kingdom, and Canada.
- DFC was highly leveraged (about $1.1 billion in debt) and faced significant regulatory uncertainty and repeated downward revisions to projections in key markets.
- DFC initiated a sale exploration with financial advisors and conducted a broad, multi-year market canvass contacting numerous financial sponsors and strategic buyers.
- Lone Star, a private equity firm, ultimately acquired DFC in a 2014 merger for $9.50 per share after earlier interest at a higher price.
- Several stockholders sought appraisal under 8 Del. C. § 262, contending the merger consideration understated fair value.
- At trial, the Court of Chancery found the process robust, arm’s-length, and well-informed, but declined to treat deal price as determinative.
- The Court of Chancery weighed three valuation indicators equally—deal price, a discounted cash flow (DCF) analysis, and comparable-company multiples—and set fair value at $10.30 per share.
- The Court of Chancery discounted the deal price based on (i) regulatory uncertainty and (ii) skepticism that a private equity buyer’s internal rate of return targets could depress price.

## Issues

1. Whether 8 Del. C. § 262(h) requires or supports a presumption that the merger price equals fair value when the sale process is arm’s-length and robust.
2. Whether the Court of Chancery abused its discretion by giving only one-third weight to deal price and equal weight to DCF and comparables despite finding a reliable sales process.

## Decision

- The Delaware Supreme Court reversed and remanded.
- The Court declined to adopt a bright-line presumption that deal price equals fair value in appraisal proceedings.
- The Court held, however, that the Court of Chancery abused its discretion on this record by assigning only one-third weight to the deal price.
- The Court rejected the “private equity carve-out” rationale as unsupported by the record and inconsistent with economic logic in a competitive process.
- The Court indicated that regulatory uncertainty did not justify discounting market-based pricing formed through a competitive, informed auction.
- On remand, the Court of Chancery was directed to reassess the weighting of valuation factors and could conclude that deal price is the most reliable indicator of fair value.

## Legal Principles

- Appraisal under 8 Del. C. § 262(h) requires the Court of Chancery to determine fair value by taking into account all relevant factors; the statute does not impose a deal-price presumption.
- Appellate review is deferential, but valuation weighting must have a reasonable basis in the record and in accepted financial principles; unsupported weighting can constitute an abuse of discretion.
- In an arm’s-length, conflict-free, well-informed, competitive sale process without a controlling stockholder, the deal price often provides strong evidence of fair value and may warrant substantial or predominant weight.
- Generalized skepticism that private equity buyers’ return requirements systematically depress price is not a valid basis, without record support, to discount deal price in appraisal.
- Business and regulatory uncertainty can make ex post modeling (e.g., DCF) less reliable, strengthening the case for relying on market-based evidence produced by informed bidders.

## Conclusion

The Delaware Supreme Court held that appraisal law does not mandate a presumption favoring deal price, but it reversed because the Court of Chancery’s equal-weight approach undervalued deal price without adequate record support after a robust, arm’s-length sale process, and it remanded for a reassessment of valuation weighting consistent with accepted financial principles.


DFC Glob. Corp. v. Muirfield Value Partners, L.P., 172 A.3d 346 (Del. 2017)