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We agree with respondent that
The key to acquiring control of Simplot is the Class
A shares. The investor would likely pay large premiums
(in cash or stock) to induce the Class A shareholders to
relinquish control. Once a majority interest of the
Class A shares is obtained, the investor could force a
merger into another company.
* * * * * * *
The disparate ratio of nonvoting to voting stock in
this case is particularly important because it
dramatically increases, on a per share basis, the value
of the Class A shares. * * * When there are very few
voting shares, as here, the result is a huge increase in
the per share value of the voting rights associated with
the Class A shares. Simplot's extreme ratio of nonvoting
to voting shares--1,848.24 to one, with only
approximately 76 voting shares--magnifies the per share
premium by a thousand times or more compared to any
company with a typical single digit ratio.
Dr. Spiro opined that the amount of the collective voting
premium should equal 10 percent of J.R. Simplot Co.'s equity value.
Mr. Matthews selected a lesser amount. He stated that an amount
ranging from 7 percent (on the high side) to 3 percent (on the low
side) of the equity value would be a "fair" collective premium for
the voting privileges.
We recognize that on the valuation date the hypothetical buyer
of decedent's 18 shares of class A voting stock would not have the
ability to control the Company's management and would be subject to
the philosophy of the other three class A shareholders, all of whom
were related and had family interests to protect. And obviously,
an investor would pay more for a block of stock that represents
control than for a block of stock that is only a minority interest
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