Elst Ltd & Cos Acts: Donegal Investment Group Plc -v- Danbywiske & ors [2014] IEHC 615 (05 December 2014)

Elst Ltd & Cos Acts: Donegal Investment Group Plc -v- Danbywiske & ors [2014] IEHC 615 (05 December 2014)

Given the joint venture/quasi-partnership nature of the relationship, the terms of the shareholder agreement, and the exceptional circumstances, the petitioner's shares should be valued without a minority or marketability discount. The market approach is the primary valuation method, with DCF used only as a cross-check. The appropriate value for the petitioner's 35% shareholding is €30.6m, subject to adjustment if the shareholding is ultimately found to be 30%.

Citation
[2014] IEHC 615
Parties
Petitioner: Donegal Investment Group Plc; Respondent: Danbywiske; Respondent: Ronald Wilson; Respondent: The General Partners of the Wilson Limited Partnership 1; Respondent: Monaghan Mushrooms Ireland; Respondent: ELST Limited
Jurisdiction
Ireland
Judgment Date
05 December 2014
Procedural Posture
Oppression Petition Under Companies Acts / Determination of Share Purchase Price Following Admission of Oppression
Outcome
Petitioner's shares to be purchased by respondents at €30.6m (for 35% shareholding), subject to adjustment if shareholding is determined to be 30%.
Legal Topics
Shareholder Oppression, Share Valuation, Minority Discount, Marketability Discount, Joint Venture, Quasi Partnership, Shareholder Agreements
Company Law Commercial Law Shareholder Oppression Share Valuation Minority Discount Marketability Discount Joint Venture Quasi Partnership +1 more

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Parties

Donegal Investment Group Plc

Petitioner

Danbywiske

Respondent

Ronald Wilson

Respondent

The General Partners of the Wilson Limited Partnership 1

Respondent

Monaghan Mushrooms Ireland

Respondent

ELST Limited

Respondent

Procedural Posture

Oppression Petition Under Companies Acts / Determination of Share Purchase Price Following Admission of Oppression

Legal Issues

  1. 1 Whether a minority discount should be applied to the petitioner's shareholding
  2. 2 Whether a marketability discount should be applied
  3. 3 Appropriate valuation methodology for the shares (market approach vs DCF)

Ratio Decidendi

Given the joint venture/quasi-partnership nature of the relationship, the terms of the shareholder agreement, and the exceptional circumstances, the petitioner's shares should be valued without a minority or marketability discount. The market approach is the primary valuation method, with DCF used only as a cross-check. The appropriate value for the petitioner's 35% shareholding is €30.6m, subject to adjustment if the shareholding is ultimately found to be 30%.

Court Disposition

Petitioner's shares to be purchased by respondents at €30.6m (for 35% shareholding), subject to adjustment if shareholding is determined to be 30%.

Orders

  • Respondents to purchase petitioner's shares at €30.6m for 35% shareholding, subject to adjustment.