Athlon Sports Communications, Inc. v. Stephen C. Duggan, et al

We granted permission to appeal in this case to address the methods by which a trial court may determine the “fair value” of the shares of a dissenting shareholder under Tennessee’s dissenters’ rights statutes, Tennessee Code Annotated sections 48-23-101, et seq. In doing so, we overrule Blasingame v. American Materials, Inc., 654 S.W.2d 659 (Tenn. 1983), to the extent that Blasingame implicitly mandates use of the Delaware Block method for determining the fair value of a dissenting shareholder’s stock. We adopt the more open approach espoused in Weinberger v. UOP, Inc., 457 A.2d 701, 712-13 (Del. 1983), in which the Delaware Supreme Court departed from the Delaware Block method and permitted trial courts to determine fair value by using any technique or method that is generally acceptable in the financial community and admissible in court. This approach allows trial courts to utilize valuation methods that incorporate projections of future value, so long as they are susceptible of proof as of the date of the corporate action and not the product of speculation. In this dissenters’ rights case, the defendant minority shareholders were forced out of the corporation as a result of a merger, and the corporation petitioned the trial court to determine the fair value of the minority shareholders’ stock. Both parties presented expert testimony regarding the valuation of the dissenting shareholders’ stock, and both experts assumed that Blasingame required use of the Delaware Block method to value the stock. However, both experts also valued the dissenting shareholders’ stock under more modern approaches, such as the discounted cash flow method. After a bench trial, the trial court discredited the testimony of the dissenting shareholders’ expert and credited the testimony of the corporation’s expert. The trial court’s order indicates that it may have based its decision on the premise that Blasingame compelled use of the Delaware Block method to determine stock value. Consequently, we remand to the trial court to reconsider its determination on valuation in light of our decision to partially overrule Blasingame