Alabama by-Products Corporation v. Phil H

This appeal challenges an appraisal, pursuant to 8 Del.C. § 262, of approximately 120,000 shares of the stock of
Alabama By-Products Corporation ("ABC"). Following a short-form merger between ABC and Drummond Holding Corporation ("Drummond")
effective August 13, 1985, ABC was absorbed into Drummond. The ABC minority shareholders were cashed-out, pursuant to the
merger, and received $75.60 per share. That consideration reflected the $75.00 per share paid to ABC shareholders pursuant
to a tender offer less than six months earlier, plus a $.60 quarterly dividend that had been missed in 1985. After a six-day
trial, the Court of Chancery issued a fifty-three page opinion which concluded that the fair value of ABC stock on August
13, 1985 was $180.67 per share, and that the petitioners/appellees ("petitioners") were entitled to that amount, with interest
thereon at 12.5% per annum from that date until paid. The appellants/respondents ("respondents") acknowledge that if the Court of Chancery had rejected their contentions with
respect to the value of ABC's stock based solely upon the weight of the evidence, there would be little for this Court to
review. However, according to the respondents, the Court of Chancery injected an inapposite consideration into the determination
of fair value, thereby skewing the statutory appraisal process. Specifically, the respondents contend that the Court of Chancery's
reliance on evidence of wrongdoing in the merger, when determining value in a statutory appraisal proceeding, was an error
of law that mandates reversal by this Court.