Investors who buy into an announced buyout and then demand a higher price in court are a growing cost of doing business for private equity. Silver Lake wants a judge to say Carl Icahn can't be one of them.
Silver Lake has sued Carl Icahn and a group of hedge funds in Delaware's Court of Chancery, seeking a ruling that the investors cannot pursue appraisal rights over Silver Lake's roughly $13 billion, $27.50-per-share buyout of Endeavor Group Holdings, a deal that closed last year.
Delaware's appraisal statute lets dissenting shareholders ask a court to set a "fair value" for their shares that can exceed the agreed deal price. Silver Lake's complaint characterizes Icahn and the other defendants as "opportunistic arbitrageurs" who bought Endeavor stock after the buyout was already announced specifically to pursue an appraisal claim, rather than as shareholders who held the stock through the deal and genuinely dissented from its terms. The complaint separately alleges coordination between Icahn and appraisal-focused funds, along with securities-disclosure issues at some of the funds involved. Icahn, for his part, has filed his own separate class action alleging that Endeavor's management and Silver Lake breached fiduciary duties and misappropriated company assets for insider benefit.
The dollar amount at stake has not been disclosed publicly beyond being described as running into the hundreds of millions or more, and the full roster of hedge fund defendants beyond Icahn has not been made public.
What makes the case worth watching well beyond Endeavor itself is the precedent it could set. Post-announcement appraisal arbitrage, buying into a target after a deal price is locked in, then betting a court will award more, has become a live risk factor across the take-private market broadly. A ruling in Silver Lake's favor would narrow that risk for future sponsors pricing deal certainty into their offers; a ruling against Silver Lake would validate the strategy and likely encourage more of it. Either way, private equity firms evaluating their next large take-private will be pricing in the outcome of this case long before it reaches a verdict.