HELLER et al.
Proceeding to determine the value of stock of stockholders dissenting from a corporate merger. The appraiser's report set the value of shares at $23.20 per share and the corporation filed exceptions. The New Castle Court of Chancery, Seitz, Chancellor, held that appraiser weighted asset value of stock of going concern too heavily.
Order in accordance with opinion.
[33 Del.Ch. 594] Clarence W. Taylor (of Hastings, Stockly & Walz), Wilmington, and Ben W. Palmer, Minneapolis, Minn., for Leonard Heller, Minnie Meyers and Henry L. Meyers, executors of Simon Meyers, deceased.
Aaron Finger (of Richards, Layton & Finger), of Wilmington, for David Kabaker and A. L. Stamm & Co.
William Poole (of Berl, Potter & Anderson), Wilmington, and Paul Christopherson and George D. McClintock, Jr. (of Faegre & Benson), Minneapolis, Minn., for defendant.
This is the decision on exceptions to the appraiser's report fixing the value of the shares of certain stockholders [33 Del.Ch. 595] who dissented from the terms of a merger and sought an appraisal under what is now 8 Del.C. § 262.
By statutory merger Munsingwear, Inc., absorbed Vassar Company. The holders of 4,400 shares of Munsingwear stock dissented from the merger and became entitled to an appraisal. After prolonged proceedings the appraiser determined the value of each share of stock to be $23.20. The dissenting stockholders filed no exceptions to the appraiser's report but Munsingwear filed numerous exceptions.
Before considering those exceptions it might be well to describe Munsingwear's business generally. Munsingwear is an old established corporation engaged in the manufacture and sale of underwear, sleepingwear, hosiery and foundation garments. Its principal plant is in Minneapolis, Minnesota. During 1950 it did a gross business of about $25,000,000. In 1950 about 40% of its business was in so-called staple goods with the balance in style goods. Munsingwear is in a highly competitive industry and the industry in general is highly volatile sales-wise. Munsingwear's management is considered good but its working capital picture has not been too impressive.
By way of introduction to defendant's exceptions I pause to point out that it it unnecessary to enter into a protracted discussion of the applicable legal principles because they are reviewed by the Supreme Court in Tri-Continental Corp. v. Battye, 31 Del.Ch. 523, 74 A.2d 71. The shares must be valued on a going concern basis.
Munsingwear's exceptions first raised the following question:
‘ Whether asset value was $46.57 per share (being book value adjusted to reflect depreciated reproduction cost of fixed assets as appraised for insurance purposes) as found by the Appraiser, or $28.58 per share (being book value adjusted to reflect depreciated historical cost of fixed assets) as contended by Munsingwear.’
The appraiser arrived at his $46.57 per share value by starting ...