## Facts

- Silgan Corporation completed a merger that cashed out Class B shareholders for $6.50 per share.
- Minority shareholders dissented and sought statutory appraisal under 8 Del. C. § 262 to determine the shares’ “fair value” as of the merger date, excluding merger-related value.
- Petitioners’ expert (Louis Paone) opined $12.65 per share, relying on market evidence and a control premium and using a DCF model with mid-year discounting and management projections.
- The company’s expert (James Kovacs) opined $4.88 per share, using market evidence without comparable-merger analysis or a control premium and using a DCF model with revisions to management projections and year-end discounting.
- Silgan’s business was seasonal, with a significant share of earnings realized late in the year, making cash-flow timing assumptions material.
- Due to the wide divergence in expert opinions, the court appointed a neutral expert to evaluate the parties’ methodologies and key assumptions.

## Issues

1. How should “fair value” be determined in a Delaware appraisal under 8 Del. C. § 262, including valuing the corporation as a going concern and excluding value arising from the merger?
2. May a court apply a minority discount or include a control premium when determining fair value in an appraisal action?
3. How should the court resolve disputed DCF inputs, including the use of management projections, terminal value assumptions, and mid-year versus year-end discounting for a seasonal business?
4. What role may a court-appointed neutral expert play in assessing competing valuation presentations?

## Decision

- The Court of Chancery determined a fair value per share that differed from both experts’ results.
- The court fixed fair value above the $6.50 merger price but below the petitioners’ $12.65 valuation.
- The court valued Silgan as a going concern and rejected any reduction for the petitioners’ minority status.
- The court declined to add a separate control premium that would import merger-related value or double count control value.
- The court adjusted valuation inputs across methodologies, including DCF assumptions about projections, terminal value, and discounting conventions, giving weight to seasonality and the neutral expert’s critique.
- Judgment awarded additional consideration to petitioners above the merger consideration, with statutory interest.

## Legal Principles

- In a § 262 appraisal, the court determines fair value as of the merger date and must exclude any element of value arising from the accomplishment or expectation of the merger.
- Appraisal values the corporation as a going concern and allocates that value pro rata to shares; a minority discount is not applied to reduce dissenters’ recovery.
- Control-related value must be treated cautiously; appraisal does not automatically add a control premium or merger-specific gains to stand-alone going-concern value.
- The Court of Chancery may accept, reject, or modify expert valuation analyses, including DCF inputs, to reach an independent determination grounded in the evidentiary record.
- A neutral expert may assist by evaluating the reliability of competing methodologies and assumptions, particularly where inputs materially affect valuation.

## Conclusion

The Court of Chancery set an appraisal value above the merger price by valuing Silgan as a stand-alone going concern, refusing to discount for minority status, avoiding merger-driven control value, and independently refining disputed DCF and market-based assumptions with assistance from a neutral expert.


Kleinwort Benson Ltd. v. Silgan Corp., 1995 Del. Ch. LEXIS 75 (Del. Ch. 1995)