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Respondent also argues that the $500 million value of
DHLI/MNV implied by the foreign investors’ 57.5 percent/$287.5
million price is short of the actual value because it does not
include a control premium. Respondent points out that although
the three foreign investors acquired a 57.5-percent interest in
concert, none of them held a majority interest, and the DHL
shareholders, either individually or collectively, did not hold a
majority interest. Accordingly, if control had been purchased
the price would have been higher, thereby supporting an amount in
excess of $300 million for the intangibles.
Petitioners argue, and we agree, that respondent’s control
premium position has no place in determining the value of the
assets individually. More particularly, a control premium has
been held to reflect the value of the shareholder’s right to
determine corporate policy, “over and above the value that is
attributable to the corporation’s underlying assets using
traditional valuation methodologies.” Philip Morris Inc. v.
Commissioner, 96 T.C. 606, 628 (1991).
As to respondent’s position that the transactional figures
could support a $300 million value for the intangibles,
petitioners’ rebuttal is that the transaction was arms length.
In other words, petitioners contend that the foreign investors,
on the basis of advice and information from their advisers,
independently came up with a $450 million price for the stock and
a $50 million price for the trademark. Respondent disagrees and
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