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The Shareholder Forumtm

special project of the public interest program for

Fair Investor Access

Supporting investor interests in

appraisal rights for intrinsic value realization

in the buyout of

Dell Inc.

For related issues, see programs for

Appraisal Rights Investments

Fair Investor Access

Project Status

Forum participants were encouraged to consider appraisal rights in June 2013 as a means of realizing the same long term intrinsic value that the company's founder and private equity partner sought in an opportunistic market-priced buyout, and legal research of court valuation standards was commissioned to support the required investment decisions.

The buyout transaction became effective on October 28, 2013 at an offer price of $13.75 per share, and the appraisal case was initiated on October 29, 2013, by the Forum's representative petitioner, Cavan Partners, LP. The Delaware Chancery Court issued its decision on May 31, 2016, establishing the intrinsic fair value of Dell shares at the effective date as $17.62 per share, approximately 28.1% more than the offer price, with definitive legal explanations confirming the foundations of Shareholder Forum support for appraisal rights.

Each of the Dell shareholders who chose to rely upon the Forum's support satisfied the procedural requirements to be eligible for payment of the $17.62 fair value, plus interest on that amount compounding since the effective date at 5% above the Federal Reserve discount rate.


 

 

For the Shareholder Forum's supplemental demand for Dell records referenced in the article below, and for a link to the initial demand, see

 

Source: Bloomberg Businessweek (AP), March 11, 2013 article

Bloomberg.com

Bloomberg Businessweek

News

 

 

AP News
Icahn signs confidentiality agreement with Dell

By Tom Murphy on March 11, 2013


Billionaire investor Carl Icahn, who is fighting Dell Inc. founder Michael Dell's plan to take the struggling company private, has entered a confidentiality agreement that would give him access to the computer maker's financial records.

Michael Dell, who is also Dell's CEO, is planning a $24.4 billion buyout that would make the Round Rock, Texas, company a privately owned business. But Icahn and other investors say the price of $13.65 per share is too low.

Icahn's company, Icahn Enterprises, has said it holds a substantial stake in the company.

Icahn wants the company to pay a special dividend of $9 per share, financed with existing cash and new debt, if shareholders reject the buyout offer.

The investor told Dell executives in a recent letter that if they decline to promise this one-time payout, then he wants the company to combine a shareholder vote on the buyout with its annual election of directors,

In that case, Icahn would nominate candidates who would implement the special dividend if they are elected, and Icahn and his company could provide more than $5 billion in loans to ensure prompt payment of the dividend.

Icahn wrote in his letter to Dell last week that the PC maker's future is bright, and all shareholders should benefit from that, not just Michael Dell. Icahn is known for buying out-of-favor stocks and boosting them by pressuring or replacing boards of directors, installing new management and other bare-knuckle tactics.

Analysts say Icahn's entry into the debate over the deal makes it less likely that shareholders will accept Dell's current buyout offer.

Shareholder Forum, a group that fights for shareholder rights, plans to demand copies of the same records that Icahn is getting, according to Gary Lutin, a former investment banker who runs the group. The Shareholder Forum last week sent a letter to Dell's board seeking access to the information that influenced the decision to sell the company at $13.65 per share. The forum wants to bring in independent experts to review whether the proposed buyout is the best choice for the company and its shareholders.

Dell appointed a special committee of directors last August after Michael Dell notified the company that he was exploring a buyout bid in partnership with other investors. Michael Dell has agreed to contribute 273 million shares of the company stock that he controls and $750 million in cash to help finance the buyout, which relies primarily on loans from PC software maker Microsoft Corp. and an assortment of banks.

Dell's special committee has said it already considered a special dividend during a "rigorous" five-month review that culminated with the buyout plan. It said last week that it is conducting a search for better alternatives to the proposed buyout, and Icahn and others are welcome to participate.

Dell shares rose 21 cents to close at $14.37 Monday. Shares of Icahn Enterprises rose 40 cents to $61.20.
 

©2013 Bloomberg L.P. All Rights Reserved. Made in NYC
 

This project was conducted as part of the Shareholder Forum's public interest  program for "Fair Investor Access," which is open free of charge to anyone concerned with investor interests in the development of marketplace standards for expanded access to information for securities valuation and shareholder voting decisions. As stated in the posted Conditions of Participation, the Forum's purpose is to provide decision-makers with access to information and a free exchange of views on the issues presented in the program's Forum Summary. Each participant is expected to make independent use of information obtained through the Forum, subject to the privacy rights of other participants.  It is a Forum rule that participants will not be identified or quoted without their explicit permission.

The management of Dell Inc. declined the Forum's invitation to provide leadership of this project, but was encouraged to collaborate in its progress to assure cost-efficient, timely delivery of information relevant to investor decisions. As the project evolved, those information requirements were ultimately satisfied in the context of an appraisal proceeding.

Inquiries about this project and requests to be included in its distribution list may be addressed to dell@shareholderforum.com.

The information provided to Forum participants is intended for their private reference, and permission has not been granted for the republishing of any copyrighted material. The material presented on this web site is the responsibility of Gary Lutin, as chairman of the Shareholder Forum.

Shareholder Forum™ is a trademark owned by The Shareholder Forum, Inc., for the programs conducted since 1999 to support investor access to decision-making information. It should be noted that we have no responsibility for the services that Broadridge Financial Solutions, Inc., introduced for review in the Forum's 2010 "E-Meetings" program and has since been offering with the “Shareholder Forum” name, and we have asked Broadridge to use a different name that does not suggest our support or endorsement.