08 Sept 2022 Cases

Compass Lexecon Client FGL Holdings Prevails in Cayman Islands Stock Appraisal Trial

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Court Relies on Testimony of Compass Lexecon Affiliate Professor Kenneth Lehn

In The Matter of FGL Holdings is a stockholder appraisal action in the Grand Court of the Cayman Islands resulting from Fidelity National Financial Inc.’s $2.7 billion acquisition of FGL Holdings on June 1, 2020. FGL shareholders received cash and stock consideration valued at approximately $11.06 per share (the “Transaction Price”). A group of shareholders that owned 12 million shares (the “Dissenters”) dissented from the merger, demanded appraisal, and claimed that FGL’s ordinary shares were worth $23.00 per share based on their expert’s dividend discount model.

Compass Lexecon Senior Consultant Professor Kenneth Lehn testified at trial on behalf of FGL Holdings that based on the economic evidence, the Transaction Price of $11.06 per share was an upper bound on the fair value of an FGL ordinary share. On September 1, 2022, the Honorable Justice Raj Parker concluded that “the Transaction Price of US$11.06 ... is the best central indicator of fair value and should be given full weight.” Justice Parker also stated that the Dissenters’ expert’s dividend discount model was “inherently unreliable” and that he could not “place any weight” on it. Justice Parker found Professor Lehn “to be an experienced and clear expert witness who ... gave evidence in a steady, measured way and in my view can be relied on for his authority and specialist knowledge.”

Professor Lehn was supported by a team at Compass Lexecon that included David Ross, Andrew Lin, Sam Hollander, Heather Freilich-Farby, Yili Wang, Jim Libby, and Lexi Lu. The team worked with Mac Imrie, Lukas Schroeter, and Malachi Sweetman at Maples Group who represented FGL Holdings, and with Evert Christensen and Miranda Schiller at Weil, Gotshal & Manges LLP who represented Fidelity National Financial, Inc.

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