On March 12, 2024, Chancellor Kathaleen Saint Jude McCormick of the Delaware Court of Chancery issued a corrected opinion determining that the fair value of Pivotal Software, Inc. (“Pivotal”) shares was $15.44 per share, $0.44 higher than the $15.00 per share price paid when Pivotal was acquired by controlling shareholder VMWare, Inc. (“VMWare”) in December 2019. The Court’s corrected fair value determination is consistent with the opinion of Coherent Economics Senior Affiliate, Murray Beach, who concluded that the fair value of Pivotal exceeded the $15 deal price.
The matter, HBK Master Fund, et al. v. Pivotal Software, Inc., involved a stockholder appraisal action filed by a group of stockholders (“Petitioners”) asserting that the $15.00 per share cash consideration received by Pivotal stockholders in conjunction with VMWare’s $2.7 billion acquisition undervalued Pivotal. Respondents’ expert instead asserted that the deal consideration of $15.00 per share was well in excess of the value of Pivotal, concluding that the value of Pivotal was $12.17 per share.
Mr. Beach testified at trial in July 2022 on behalf of Pivotal that based on the economic evidence, the fair value of Pivotal shares as of the closing of the transaction exceeded the $15 cash consideration, and that the $12.17 per share conclusion offered by the Respondents’ expert was inconsistent with a fair value above $15.
Chancellor McCormick ruled that the equal weighting of Mr. Beach’s comparable company analysis (with certain modifications) and Respondents’ expert’s discounted cash flow analysis (with certain modifications recommended in part by Mr. Beach), resulted in a fair value of Pivotal stock of $15.44, after correcting for errors in an earlier ruling in August 2023.
Mr. Beach was supported by a Coherent Economics team including Ann Hughes, Sebastian Peinado, Disovankiri Boung, Derrick Ding, Tuna Coluk, and Kayla McCarthy.
Coherent Economics worked closely with Steven Hecht and Frank Catalina of Rolnick Kramer Sadighi LLP and Sam Hirzel and Elizabeth DeFelice of Heyman Enerio Gattuso & Hirzel LLP, who successfully represented Pivotal’s shareholders in the stockholder appraisal action.