Compass Lexecon Client 58.com Prevails in Cayman Islands Stock Appraisal Trial

In The Matter of 58.com, Inc. is a stockholder appraisal action in the Grand Court of the Cayman Islands arising from the acquisition of 58.com, Inc. (“58.com”) on September 18, 2020, at $56.00 cash for each American depositary share (“ADS”), each of which represented two Class A ordinary shares. 74 shareholders (“the Dissenters”), who held 70,524,198 Class A shares as of the date of the acquisition, dissented from the merger and asked the Grand Court to determine the “fair value” of their shares.

The Dissenters proposed that the fair value of 58.com was $105.56 per ADS, based on their expert’s discounted cash flow (“DCF”) analysis. Compass Lexecon President and Chairman Daniel R. Fischel was retained as the expert for 58.com. He contended that the fair value of 58.com was $54.18 per ADS, which equals the average of the midpoint of a range of adjusted market trading prices and the transaction price of $56.00 cash per ADS. The difference between the parties as to the fair value of the Dissenters’ shares exceeded $1.7 billion.

The Honorable Justice Margaret Ramsay-Hale, Chief Justice of the Grand Court, cited Professor Fischel’s testimony favorably multiple times and determined the fair value of a share to be $56.00 per ADS. She also concluded that the Dissenters’ expert’s DCF valuation was based on a set of projections which “cannot safely be treated as a forecast of [58.com’s] expected performance as a public company” and “produces a valuation materially in excess of all contemporaneous prices, including the merger price and observed trading prices.”

Professor Fischel was supported by a Compass Lexecon team that included David Ross, Rajiv Gokhale, Sam Hollander, Andrew Lin, Jonathan Polonsky, Yili Wang, and Lexi Lu.

Richard Boulton KC and Mac Imrie KC acted for 58.com, instructed by Caroline Moran and Malachi Sweetman of Maples and Calder (Cayman) LLP.