Pueblo Bancorporation v. Lindoe, Inc.
Supreme Court of Colorado
63 P.3d 353 (2003)
When Pueblo Bancorporation (defendant) merged to become an S corporation -- which cannot have corporate shareholders -- it cashed out corporate shareholders like Lindoe (plaintiff), who owned about 6% of the company, at an appraised $341 per share; Lindoe dissented and sought a higher value, and the trial court accepted Pueblo's argument for a marketability discount given the shares' limited trading market, valuing them at $344 per share. The court of appeals reversed, rejecting the marketability discount, and Pueblo appealed.
Whether the fair value owed to a dissenting shareholder demanding payment for its shares is calculated as the shareholder's proportionate interest in the corporation's overall value.