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acquired 40 percent of the stock of Burndy-Japan, bringing its
total ownership to 90 percent.
Respondent’s expert, Keith Reams (Reams), concluded that
Burndy-US paid Furukawa and Sumitomo a control premium when it
acquired an additional 40 percent of the stock of Burndy-Japan in
1993. Petitioners’ expert, Masami Hashimoto (Hashimoto),
concluded that Burndy-US did not. Reams’s analysis on this point
was more convincing than Hashimoto’s. KPMG used various methods
to appraise Burndy-Japan stock in 1993, resulting in 34 different
estimates of value. Reams considered all of KPMG’s estimates.
Reams appraised (independently from KPMG) the shares that Burndy-
US bought in 1993 and concluded that a 30-percent control premium
had been paid. Respondent’s expert, Mukesh Bajaj (Bajaj), said
in his rebuttal to Hashimoto’s report that most of the KPMG
estimates of the value of Burndy-Japan stock in 1993 were less
than the price Burndy-US paid. This suggests that Burndy-US paid
a premium.
Petitioners contend that Reams’s testimony is irrelevant
because Reams did not use the liquidation method that respondent
asks us to apply in deciding whether Burndy-US satisfies section
957(a)(2). We disagree; Reams’s testimony is relevant to whether
Burndy-US paid a control premium in 1973 or 1993.
Hashimoto did not appraise the shares that Burndy-US bought
in 1993. He selected 1 of KPMG’s 34 estimates (�8,868 per share)
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