## Facts

- Spang Industries, Inc. (successor to Magnetics, Inc.) manufactured and sold magnetic electronic components.
- On January 31, 1983, the company was merged into an acquiring entity associated with Spang & Co. under a merger agreement dated November 16, 1982.
- Shareholders approved the merger at a special meeting; at the effective time, each share (other than those held by Spang & Co.) converted into the right to receive $20.00 cash per share.
- The corporation provided statutory notice of the merger’s effectiveness and reiterated its $20.00 per-share offer to shareholders.
- Certain shareholders dissented, rejected the offer, and sought an appraisal determination of “fair value” under Pennsylvania’s dissenters’ rights statute.
- The trial court heard testimony from three valuation experts who addressed market value, investment value, and net asset value; the experts generally treated net asset value as the most reliable measure.
- The experts’ net asset value analyses included an allowance for intangibles, though no separate proof quantified those intangibles.
- The trial court averaged the experts’ net asset values and applied weights of 80% (net asset), 10% (market), and 10% (investment), setting fair value at $32.75 per share.
- The trial court also awarded $154,964.25 in expert witness fees to dissenting shareholder Edgar V. Weir.

## Issues

1. Whether the trial court abused its discretion or committed legal error in determining “fair value” by averaging expert net asset values (including intangible allowances) and weighting net asset value at 80% with market and investment value at 10% each.
2. Whether the trial court had authority to award, and did not abuse its discretion in awarding, $154,964.25 in expert witness fees to a dissenting shareholder.

## Decision

- The Superior Court affirmed the order setting fair value at $32.75 per share.
- The court held the valuation approach was within the trial court’s discretion and supported by competent evidence, including the court’s ability to accept or reject expert testimony in whole or in part.
- The court rejected the argument that including intangibles required reversal, treating their consideration as permissible within an overall valuation judgment.
- The Superior Court affirmed the expert-fee award as authorized and supported by the record, given the technical nature and demands of the appraisal proceeding.

## Legal Principles

- “Fair value” in a dissenters’ appraisal is a fact-specific determination that may consider market value, investment (earnings) value, and net asset value.
- A trial court may assign dominant weight to net asset value when the evidence supports it, and may synthesize conflicting expert opinions through averaging and weighting.
- Appellate review of appraisal valuations is highly deferential; reversal is warranted only for legal error or abuse of discretion, not mere disagreement with factfinding or weight of evidence.
- Reasonable expert witness fees may be awarded in appraisal proceedings when necessary to enable effective presentation of valuation evidence and supported by the evidentiary record.

## Conclusion

The court upheld a trial court’s composite valuation methodology that heavily weighted net asset value to determine dissenters’ “fair value” in a merger appraisal, and it sustained a substantial expert-fee award as a permissible and supported component of the proceeding.


In re Spang Indus., Inc., 535 A.2d 86 (Pa. Super. Ct. 1987)