- 32 -
The sale of FOH stock by the Harriett trust to the FOH ESOP
for a price of $4.20 per share, which represented a discount of
30 percent from its then-closing price on the NYSE, occurred
9 months after the valuation date. Respondent argues that this
was not a sale to a third party, so it should not be taken into
consideration in valuing the stock. In any event, this sale was
of class A capital stock after the amendment to the articles of
incorporation that altered the capital structure of FOH. After
the amendment, there were two classes of stock, one with voting
rights and the other without. Neither party addressed how this
fact affects the valuation. Thus, we are cautious in assigning
weight to this transaction.
The market transaction in which the Harriett trust sold
29,500 shares of FOH stock at $4.875 per share on February 18,
1994, does not support petitioner's contentions, because those
shares sold for the undiscounted price at which the stock was
trading on the NYSE on that day.
On the record before us, we are satisfied that the
respective discounts as determined by the experts set the
appropriate range from which we may determine the marketability
discount. We also conclude, however, that each expert excluded
information that contradicted his result. Only Cotler addressed
the specifics of FOH's financial situation in detail, but he
relied on mean discounts without relating them to those details.
Page: Previous 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 NextLast modified: May 25, 2011