Compass Lexecon Client 51job, Inc. Prevails in Cayman Islands Stock Appraisal Trial

In The Matter of 51job, Inc. is a stockholder appraisal action in the Grand Court of the Cayman Islands arising from the acquisition of 51job, Inc. (“51job” or “the Company”) on May 6, 2022, at $61.00 in cash per share. 52 shareholders (the “Dissenters”), who held 20,770,485 shares of 51job common stock, dissented from the merger and asked the Grand Court to determine the “fair value” of their shares. At trial, the Dissenters’ expert opined that the fair value of 51job was $111.06 per share, based on his discounted cash flow analysis. Compass Lexecon Senior Consultant Professor Kenneth Lehn, who served as 51Job’s expert, opined that the fair value of 51job was $31.11 per share, based on the adjusted market price of 51job’s common stock.

The Honorable Justice David Doyle determined that the adjusted market price of $31.11 per share represented fair value, based on Professor Lehn’s testimony. He also concluded that “no weight whatsoever can be placed on [Dissenters’ experts’] DCF analysis," which “is fundamentally flawed and totally unreliable for reasons essentially put forward by Professor Lehn and the Company (including optimistic projections, staleness and steady state issues).” Justice Doyle also stated that “Professor Lehn was an impressive witness” and “found Professor Lehn’s approach and evidence far more helpful than [Dissenters’ expert’s] approach and evidence.”

The decision is significant because this is the first time the Grand Court has given full weight to the adjusted market trading price. The amounts at issue were also significant: the difference between the parties as to the fair value of the dissenting shareholders’ shares was approximately $1.7 billion.

Professor Lehn was supported by a team at Compass Lexecon that included David Ross, Rahul Sekhar, Sam Hollander, Andrew Lin, Jonathan Polonsky, Yili Wang, and Lexi Lu.

Richard Boulton KC acted for 51job, alongside Mac Imrie KC, instructed by Caroline Moran and Malachi Sweetman and the litigation team at Maples and Calder (Cayman) LLP.