HMO-W Inc. v. SSM Health Care System
Wisconsin Supreme Court
611 N.W.2d 250 (2000)
HMO-W (plaintiff) proposed merging with United Wisconsin Services and had its assets valued between $16.5 and $18 million by an outside appraiser before shareholders approved the merger; dissenting shareholders SSM and Neillsville (defendants) demanded fair value for their shares, prompting HMO-W to hire a second appraiser that valued the company at only $7.4 million and to pay SSM roughly $1.5 million based on that lower figure. SSM disputed the valuation as the product of unfair dealing, seeking closer to $4.7 million; after an appraisal proceeding where the trial court accepted HMO-W's valuation evidence but applied a 30% minority discount, the court of appeals affirmed the valuation but rejected the discount, and the state supreme court granted review.
Whether a minority discount may be applied in determining the fair value of a dissenting shareholder's shares upon a corporate merger.