## Facts

- General Shareholdings Corporation was a closed-end, leveraged investment company whose common stock often traded at a discount to net asset value (NAV).
- In 1948, General merged into its parent, Tri-Continental Corporation.
- Dissenting General common stockholders demanded appraisal under Delaware’s merger appraisal statute, seeking the value of their shares as of the merger date, excluding any merger-related value.
- The Court of Chancery appointed an appraiser to determine fair value.
- The appraiser calculated per-share asset value at $5.15, added $0.29 for favorable tax attributes, and used $5.44 as the “fairest asset value.”
- Based on the company’s closed-end and leveraged structure, the appraiser applied a 25% discount to $5.44 and valued the shares at $4.08 per share.
- The Court of Chancery modified the result by giving independent weight to the undiscounted $5.44 figure and set fair value at $4.62 per share.
- Tri-Continental appealed, arguing the appraiser’s discounted approach reflected the proper statutory “value.”

## Issues

1. Under Delaware’s appraisal statute, whether “value” requires payment of the stockholder’s intrinsic going-concern interest, permitting a discount from NAV for a closed-end leveraged investment company.
2. Whether the Court of Chancery erred by giving independent weight to undiscounted asset value in a manner that diluted the appraiser’s discount.

## Decision

- The Supreme Court of Delaware reversed the Court of Chancery’s valuation.
- The court approved the appraiser’s method and held the 25% discount from the “fairest asset value” was proper for this type of enterprise.
- The court rejected the Chancery Court’s weighting approach because it effectively blended discounted and undiscounted asset values and overstated intrinsic value.
- The result reinstated the appraiser’s $4.08 per-share valuation.

## Legal Principles

- Appraisal “value” is the true or intrinsic value of the dissenting stockholder’s proportionate interest in the corporation as a going concern, as of the merger date and excluding merger-generated value.
- The valuation must consider all relevant factors bearing on intrinsic value, including asset value, market value, dividends, earning prospects, the nature of the enterprise, and other knowable facts affecting future prospects.
- No single metric (such as NAV or market price) is controlling; the task is to integrate relevant factors into a defensible intrinsic-value determination.
- For a closed-end, leveraged investment company, a discount from underlying asset value may be required because stockholders cannot realize pro rata NAV absent liquidation and because leverage and structure affect the stock’s intrinsic worth.
- A court errs when it gives separate, independent weight to an undiscounted asset-value figure after the appraisal method has already incorporated asset value and applied an appropriate structural discount.

## Conclusion

The court held that Delaware appraisal awards dissenters the intrinsic, going-concern value of what was taken, and that for a closed-end leveraged investment company this may require discounting NAV; a valuation method that separately reweights undiscounted asset value improperly inflates the statutory measure of value.


Tri-Continental Corp. v. Battye, 74 A.2d 71 (Del. 1950)