Bmc to manage their business services and applications across distributed, mainframe, virtual and cloud environments. Merion capital lp urged a delaware chancery judge on tuesday to reprice its holdings in bmc software inc. Hedge fund scores win for appraisal arbitrage strategy. Business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. In two separate rulings on january 5, 2015 in re appraisal of. Merion determined that the consideration offered in the bmc merger was considerably below fair value and purchased shares of bmc stock, with cede as the record owner. The parties submitted posttrial briefing and i heard posttrial oral argument on june 23, 2015.
On september, 20, petitioners merion capital lp and merion capital ii lp commenced this action by filing a verified petition for appraisal of stock pursuant to 8 del. In the supreme court of delaware longpoint investments trust and alexis large cap equity fund lp, petitioner, v. Chancery court holds that merger price that resulted from. The company provides information technology it management solutions for large, midsized. In re appraisal of dell inc the continuing relevance of deal price. Possibility of buying into an appraisal claim reaffirmed. Servicenow, three patent infringement suits filed by bmc, two in the u. Bmc software opinion and the lessons learned for experts when opining on fair value in delaware in this action, which was the largest statutory appraisal action in the delaware court of chancery since 2010, dissenting shareholder merion capital.
Petitioners merion capital lp and merion capital ii lp collectively, merion are selfdescribed eventdriven investment funds, 5 or, in the words of the respondent, hedge funds that specialize in appraisal arbitrage. Chancery court confirms standing of record holder as of appraisal. Brattle principal torben voetmann and senior associate sujay dave have authored a law360 article on the merion capital lp and merion capital ii lp v. Merion, the beneficial owner of the shares, requested its broker to direct the nominee record holder of its shares to demand. In bmc software, merion and an affiliated fund for simplicity, collectively referred to as merion purchased shares of bmc software, inc. In this case, the broker refused to initiate an appraisal action and merion capital transferred record ownership of the shares into its own name and made a direct appraisal demand. Kkr to acquire bmc software five years after bain capital and.
In bmc software, petitioner merion capital lp merion sought appraisal for 7. On october 21, 2015, the delaware court of chancery issued a posttrial opinion in an appraisal action in which it yet again found that the merger price was the most reliable indicator of fair value. I presided over a fourday trial in this matter from march 16 to march 19, 2015. Hedge fund scores win for appraisal arbitrage strategy reuters. In a pair of monday rulings, sam glasscock, a vice chancellor of the court of chancery, ruled that radnor, pennsylvaniabased hedge fund merion capital could seek an. Thats why more than 20,000 it organizations from the global 100 to the smallest businesses in over 120 countries rely on bmc software nasdaq. Merion capital lp and merion capital ii lp, bmc software. Bmc software bmc merged with two private delaware corporations for the purpose of taking bmc private. Merion capital lp and merion capital ii lp, after acquiring stock of bmc for the sole purpose of seeking appraisal in connection with the transaction, brought an appraisal action following consummation of the merger. Bmc offers saasbased and onpremise software and services in areas including cloud computing, it service management, automation, it operations, and mainframe. In bmc software, merion capital sought appraisal, through its broker, with respect to shares of bmc purchased after the record date of a goingprivate transaction. Bladelogic and other bladelogic marks are assets of bladelogic, inc.
In two opinions issued the same day, the delaware court of chancery addressed standing requirements under delawares appraisal statute. Bmc stock was originally traded on nasdaq under the symbol bmcs and on the new york stock exchange with symbol bmc, but the. Bmc, the bmc logo, and other bmc marks are assets of bmc software, inc. In fiscal years 2011 to 20, bmc, one of the largest software companies in the world, saw a steady decrease in its revenue. Bmc that were purchased after the record date for a goingprivate merger. Chancery court confirms standing of record holder as of. Bmc helps customers run and reinvent their businesses with open, scalable, and modular solutions to complex it problems.
Vice chancellor glasscocks opinion in merion capital lp v. The fourth requirement being the main contention in the issue presented. Recent delaware rulings support practice of appraisal. Delaware court of chancery rejects sharetracing standing. The october 21, 2015 decision, merion capital lp and merion capital ii lp v. Bmc is a software companyone of the largest in the world at the time of. Bmc software was brought by merion capital, a selfdescribed eventdriven investment fund that specializes in appraisal arbitrage. Delaware judge rules against hedge funds in bmc buyout. Chancery court permits appraisal arbitrage morris james.
Lowenstein sandler appraisal rights litigation blog. Immediately prior to the merger, petitioners owned 7,629,100 shares of bmc common stock. Upon a petition for appraisal of stock pursuant to 8 del. Bmc software, an appraisal action in which the plaintiffs alleged that the sale price for bmc did not reflect the fair value of the growing concern. Chancery decision demonstrates when to skip appraisal law360. In a pair of memorandum opinions written by vice chancellor glasscock and decided on january 5, 2015, the court of chancery of the state of delaware, in in re appraisal of, inc. The following article was reported by the august 1, 2016. The decision throws cold water on arguments by merion capital and merion capital ii lp that their 7. The stockholder in that case faced a unique problem because cede refused to make its appraisal demand on its behalf, so merion was forced to have its holdings in bmc stock. District court for the eastern district of texas in marshall and one in germany. Bmc softwares lessons for expert witnesses law360, new york february 23, 2016, 11. Private equity firm kkr is broadening its technology reach as it acquires bmc software from a bain capital and golden gate capital led. Merion, a hedge fund, then decided that the fair value of bmc was much higher and began buying bmc shares.