Piemonte v. Boston Garden Corp.

FACTS:  By statute, SH’s are entitled to demand payment for their shares from the surviving or resulting corp. when their corp. undergoes a merger.  In pursuit of this right, Piemonte and other SH’s in Boston Garden Arena Corp. sought a judicial determination of the “fair value” of their shares when their corp. decided to merge w/New Boston Garden.  The judge set about determining the “fair value” of their shares “as the day of the preceding date of the vote approving the proposed corp. action” (i.e. the merger).  Both parties appealed from this judgment, voicing various objection to his method of determining value.

ISSUE:  In making a judicial appraisal of the “fair value” of stock, should there be a determination of the market value, the earnings value, and the net asset value of the stock, followed by an assignment of a %age weight to each of the elements of value?

HOLDING:  Yes, the judge below adapted a general approach to the appraisal of stock known as the Delaware procedure or “Delaware Block Approach”, which is quite appropriate.  It calls for a determination of the market value, the earnings value, and the net asset value of the stock, followed by the assignment of a %age weight to each of the elements of value.  These factors are then used to compute the stock’s “fair value”.  In making findings as to these various elements of value and the weight each should be given, the judge is not constrained to accept any particular party’s valuation but is free to exercise his own discretion in the matter.  As long as he does not abuse his discretion, the judge’s valuations will be upheld.  The record show the judge may have felt bound by certain expert valuations, so the case is remanded for a clarification as to his own determinations of value in those instances.

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