This high-profile private valuation dispute case has set a new precedent for rulings by the Grand Court of the Cayman Islands.
Recently, the Grand Court of the Cayman Islands issued a trial judgment, clearly determining that the fair value of 51job's shares on its privatization valuation date in May 2022 was $31.11 per share. This decision rejected the dissenting shareholders' claim of $111.06 per share based on a discounted cash flow (DCF) valuation model.
The ruling means dissenting shareholders will suffer significant losses.
First, if the buyer consortium has not yet paid the dissenting shareholders, the payment can now be executed at the court-determined $31.11 per share. This is not only substantially lower than the $111.06 per share claimed by dissenting shareholders but also just half of the final privatization price of $61 per share.
Second, if the buyer consortium has already made partial or full payment to dissenting shareholders, they may seek to recover the difference if relevant terms exist in the privatization agreement.
In either scenario, dissenting shareholders face an awkward predicament following the judgment.
The court ruling shows the judge based the fair value determination on 51job's closing price on January 11, 2022 (the day before the buyer consortium's offer), adjusted for the 32.7% decline in the Nasdaq Golden Dragon China Index between January 11 and April 26, 2022, ultimately arriving at $31.11 per share.
Notably, the dissenting shareholders' high valuation claim using the DCF method drew criticism from the presiding judge.
"The Cayman Islands appears to have developed a unique industry around Section 238. These cases place enormous pressure on the legal system, judicial administrators, and judges. Well-funded litigants, experts, and lawyers advance all manner of arguments, sometimes bordering on the fanciful," the judge remarked in the ruling.
The referenced "Section 238" refers to Section 238 of the Cayman Islands Companies Law, which grants dissenting shareholders the right to petition courts to determine fair value for their shares during mergers and acquisitions, rather than accepting the company's proposed price. While designed to protect minority shareholders against undervaluation in delistings, this provision has increasingly been exploited by holdout shareholders seeking excessive payouts.
This case marks the first complete victory for the defendant in Section 238 litigation, carrying historic significance—the judge fully endorsed 51job's valuation methodology.
Previous rulings typically blended valuation methods proposed by both parties with assigned weights. In this judgment, however, the judge outright rejected the dissenting investors' DCF approach, demonstrating notable judicial courage.
The judge not only stated that "the DCF analysis by the dissenting shareholders' expert was entirely unreliable and fundamentally flawed," but also emphasized that "this case reminds us that Section 238 requires a fair, objective assessment of value—not speculative or exaggerated claims."
Case timeline: - September 2020: Buyer consortium led by DCP Capital and Ocean Link makes initial privatization offer of $79.05 per share, valuing 51job at approximately $5.7 billion - June 2021: 51job signs definitive agreement with buyer consortium confirming the offer price - January 12, 2022: Buyer consortium reduces offer to $57.25 per share citing deteriorating market conditions and regulatory tightening, sparking shareholder discontent - March 1, 2022: After negotiations, parties amend agreement to final price of $61 per share, representing a 33.1% premium over the January 11 closing price of $45.83 - May 6, 2022: Privatization completes with 51job delisting from Nasdaq; dissenting shareholders subsequently file valuation dispute lawsuit - December 2022: Grand Court initially rules fair value at $31.11 per share, rejecting DCF methodology - June 24-July 29, 2025: Court conducts substantive trial - November 24, 2025: Final judgment reaffirms $31.11 per share fair value, again dismissing dissenting shareholders' DCF model
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