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Cayman Grand Court delivers important s.238 ruling on the approach to fair value of a company’s shares

Published: Tuesday 28 May 2019

On 13th May 2019, the Grand Court of the Cayman Islands handed down judgment in the case of Re Qunar Cayman Islands Limited. Qunar is one of China’s largest online travel companies, with headquarters in Beijing.  The company was taken private in 2017 by way of a merger under Part XVI of the Companies Law. There were eight dissenting shareholders who contended that the Merger Consideration and valuation which was subsequently arrived at by the Company and its experts in these proceedings significantly undervalue the company. Consideration was also given to undervaluation of Chinese companies taking place on US exchanges.

The Court accepted that the company’s trading price on NASDAQ was reflective of fair value at the relevant time. In its ruling, the Court adopted the approach used by the company’s expert of a blended approach of market trading valuation of the shares prior to the merger and discounted cash flow (DCF) methodology to reach a just and equitable outcome which determined fair value for the dissenters. You can download the full judgment here.

This is only the third consideration of the fair value of a Cayman Islands company’s shares under section 238 of the Companies Law, following Re Integra and Re Shanda Games. The case has attracted widespread media attention, including in The Lawyer here.

Tom Lowe QC successfully acted for Qunar and was instructed by Jessica Williams and Paul Madden of Harneys.