Not good for us if we plan on dissenting:
While a Canadian court, like a U.S. court, can employ a range of valuation methodologies in fixing the fair value of shares, the decision in Deer Creek suggests that where the shares of a target trade actively, the market price likely represents fair value.
The approach to valuation taken in Deer Creek is less promising to activists in Canada hoping that litigating fair value will yield a premium to the price offered in a transaction. Moreover, if activists do begin to make more use of dissent rights in connection with Canadian deals, bidders and targets might be able to limit the effectiveness of that activist tool. In Canada, a friendly M&A transaction is usually completed as a plan of arrangement, a process in which it is possible to use the power of the court to constrain or even eliminate dissent rights, subject to the requirement that the court still finds that the transaction is fair and reasonable. Although arrangements typically provide for dissent rights as a matter of course, the availability of this possible structuring solution may also mean that dissent rights will not become a more popular tool for activist investors in Canada even as they are increasingly used in the United States.
