Compass Lexecon’s Client Cox Radio, Inc. Prevails in Litigation Over Fair Value of Shares

On May 29, 2009, Cox Enterprises, Inc. consummated a short-form merger in which Cox Enterprises, Inc., through its wholly-owned subsidiary Cox Media Group, acquired the shares of Cox Radio, Inc. stock it did not own at a price of $4.80 per share. Petitioners (Towerview LLC et al.) alleged that the merger consideration of $4.80 per share substantially underestimated the value of their shares.

Compass Lexecon was retained by Respondents to analyze the value of the shares. Compass Lexecon expert Rajiv Gokhale testified at a four-day trial at the Court of Chancery of the State of Delaware that the fair value of the petitioners’ shares was in the range of $3.40 to $5.29, with a midpoint of $4.28 per share. By contrast, Petitioners’ valuation expert testified that the fair value of the petitioners’ shares was between $11.05 and $12.12 per share.

On June 28, 2013, Vice Chancellor Donald F. Parsons issued an opinion concluding that the fair value of petitioners’ shares was $5.75 per share. In reaching his decision, Vice Chancellor Parsons accepted and began with “Gokhale’s model as a general framework,” because “Gokhale’s approach provides a more appropriate starting point,” and found “Gokhale’s valuation approach to be more reliable generally.”

Compass Lexecon worked with Kevin Abrams, J. Peter Shindel Jr., and Daniel Gordon of Abrams & Bayliss LLP. Rajiv Gokhale was assisted by Cliff Ang, Margaret Hlebowitsh, Avisheh Mohsenin, Andrew Lin and others in Compass Lexecon’s Chicago office.