In a groundbreaking ruling following a six-week trial in the summer of 2025, in which Nick Taylor acted for the successful company, the Cayman Islands Grand Court has, for the first time, determined that the adjusted market trading price alone represents fair value in s.238 proceedings.
Under section 238 of the Companies Act (2025 Revision), shareholders of a merged or consolidated Cayman Islands company who dissent from the merger can ask the Grand Court to determine the “fair value” of their shares.
In early Cayman Islands appraisal cases, the Grand Court placed heavy reliance on discounted cash flow (DCF) valuations as a means of valuing companies.
Determinations of fair value far in excess of the merger price encouraged some institutional investors to invest in Cayman Islands companies after a merger was announced, with a view to obtaining an uplift on what they paid for the shares via the section 238 procedure—often by arguing (amongst other things) that the US market price did not reflect value-accretive material non-public information, that the evidence of market efficiency for the Chinese companies being delisted was weak and the merger process was not fair and robust.
The sums at stake are often significant. In this case, the difference in expert valuations was about $1.7bn.
In the matter of 51job, Inc [2025] CIGC (FSD) 112, which is the latest case to go to a full trial, the Grand Court (Doyle J) determined that the adjusted market price of $31.11 represented fair value. The Court therefore endorsed the valuation advanced by the company in full, concluding that fair value was below both the merger consideration of $61 per share and significantly below the dissenting shareholders’ position of $111.06 per share.
The ruling is highly significant, as it is the first time that the Grand Court has placed full weight on the adjusted market trading price. It is by far the most successful outcome for any company in section 238 Cayman Islands proceedings to date.
Nick Taylor acted for 51job, the company, in the six-week trial along with Richard Boulton KC (One Essex Court) and Mac Imrie KC (Maples and Calder (Cayman) LLP), and was instructed by Maples and Calder.
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