Silver Lake seeks Delaware ruling to curb Endeavor appraisal claims

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Silver Lake seeks Delaware ruling

Highlights

Silver Lake sues Carl Icahn and hedge funds in Delaware, seeking to block appraisal claims on Endeavor shares bought after its $13 billion, $27.50-a-share acquisition announcement.
Endeavor becomes a test case for appraisal arbitrage, with Silver Lake warning it faces hundreds of millions in extra payout if the court favors post-announcement buyers.
Following changes to Delaware law making fiduciary-duty suits harder, appraisal litigation has risen, with Silver Lake accusing some funds of inadequate securities disclosures.

Delaware challenge over post-deal share purchases

As reported by Reuters, Silver Lake Technology Management LLC sues billionaire Carl Icahn and dozens of hedge funds in Delaware's Court of Chancery to block appraisal claims tied to Endeavor shares bought after the firm announced in 2024 that it would acquire the company for $13 billion, or $27.50 a share.

Under Delaware corporate law, investors who argue that a merger price undervalues a company can bring an appraisal action asking a judge to determine the stock's fair value. Unlike a class action, an appraisal case applies only to the shares held by the plaintiff investors, and the court can set a value above or below the deal price.

Silver Lake argues in its complaint that the hedge funds are using the legal process as a profit strategy rather than acting as genuine dissenting shareholders. An attorney for the hedge funds declines to comment, while the complaint says Icahn and the funds deny allegations that they coordinated Endeavor stock purchases.

Litigation shift raises stakes for dealmakers

Endeavor becomes a prominent target for appraisal arbitrage, a strategy in which investors buy shares after a deal announcement and then seek a higher court-determined valuation. Silver Lake says a ruling in its favor would shield it from potentially paying hundreds of millions of dollars or more on the transaction.

Even so, the Court of Chancery has held that investors who buy shares after a deal is announced have the right to pursue appraisal claims. Icahn is not part of an appraisal case, but he files a separate class action alleging that Endeavor management and Silver Lake breach fiduciary duties and divert company assets to benefit insiders.

Silver Lake also accuses some funds of failing to make proper securities disclosures on their Endeavor share purchases. The case unfolds after Delaware lawmakers last year changed corporate law to make traditional fiduciary-duty suits and access to corporate records harder in deals involving large or controlling shareholders, a shift that Delaware lawyers say has been followed by more appraisal litigation.

Our earlier coverage of California’s settlement clearing Paramount-Skydance’s planned acquisition of Warner Bros. Discovery explained how the agreement removed a key legal obstacle without requiring asset divestitures. We noted that regulators instead relied on time-limited behavioral commitments—such as editorial-board safeguards and a pledge to release 30 films per year—while critics warned the deal could still reduce competition and accelerate industry consolidation.

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