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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.


 

 

Requirements for reserving the rights to appraisal referenced below had been addressed in the September 6, 2013 Forum Report: Reserving Value Realization Alternatives Before the Dell Vote. For copies of the letter to shareholders reported in the article and a related announcement, see

 

Source: Bloomberg, September 9, 2013 article and video

Bloomberg.com

Bloomberg

 

 

Icahn Gives Up Dell Fight While Saying Offer Too Low

 

Billionaire Carl Icahn gave up his fight to control Dell Inc. (DELL), saying he continues to oppose founder Michael Dell’s $24.9 billion plan to take the company private because it undervalues the computer maker.

Dell and partner Silver Lake Management LLC sweetened their takeover proposal last month, offering a dividend of 13 cents a share on top of an already increased $13.75-a-share bid for the computer maker. The price is still 70 percent below the stock’s 10-year high of $42.38, Icahn said in a filing today.

While billionaire Carl Icahn said he was still against the proposal and would seek appraisal rights, his surrender removes a major obstacle to the takeover bid of Dell Inc. Photographer: Scott Eells/Bloomberg

 

[To view the video, click here]

[Sept. 9 (Bloomberg) -- Billionaire Carl Icahn talks about his decision to give up his fight to control Dell Inc. Icahn, speaking with Trish Regan on Bloomberg Television's "Street Smart," also discusses the outlook for Apple Inc., Netflix Inc. and J.C. Penney Co. (Source: Bloomberg)

 

“I realize that some stockholders will be disappointed that we do not fight on,” Icahn said. “While we of course are saddened at our losing the battle to control Dell, it certainly makes the loss a lot more tolerable in that as a result of our involvement, Michael Dell/Silver Lake increased what they said was their ‘best and final offer.’”

While Icahn said he was still against the proposal and would seek appraisal rights, his surrender removes a major obstacle to the takeover bid. Dell, who serves as chairman and chief executive officer, is pushing to take the PC maker private so he can execute a turnaround plan outside the spotlight of public markets.

Shareholders will convene on Sept. 12 at Dell’s Round Rock, Texas, headquarters to vote on the buyout. It’s the fourth such scheduled meeting -- the previous three were adjourned amid procedural steps by CEO Dell, Silver Lake and the special committee of Dell’s board managing the process.

‘Lot Easier’

“It’s going to make the shareholder meeting a lot easier,” Shannon Cross, an analyst at Cross Research, said of Icahn’s decision. “Now we’re going to have to just sit back and see whether Michael Dell succeeds with the company. It’s going to be good for the industry that there is some certainty about how Dell is going to end up.”

Dell was little changed at $13.85 at 9:52 a.m. in New York. The shares had risen 36 percent this year through last week, mirroring the increases in the takeover proposal.

Investor-advisory firms Institutional Shareholder Services Inc., Glass, Lewis & Co. and Egan-Jones Ratings Co. have all put out reports reiterating their endorsement of the Silver Lake-led buyout. The group sweetened its offer on Aug. 2 and guaranteed payment of the company’s third-quarter dividend by the time the deal closes.

The moves swayed investors including Franklin Mutual Advisers and BlackRock Inc. (BLK) to support the deal. The vote this week would effectively mark the end of a saga that’s stretched out for most of this year as Dell tried to win support for his buyout against opposition by Icahn and other dissident shareholders.

Appraisal Tactic

Icahn is taking his chances that he can get a better price than the current takeover offer by going to court. In July, he disclosed that he had opted for appraisal rights on the 152 million Dell shares that he owned. At the time, he also urged other shareholders to seek appraisal rights under Delaware law, a process that entitles them to receive “fair value” for their shares as determined by the state Chancery Court.

In order to qualify for the appraisal process, stockholders must forgo voting in favor of Michael Dell’s bid and submit a written demand for appraisal before the ballots are cast. In his regulatory filings, Icahn said other stockholders could seek help with the appraisal process by contacting the billionaire through D.F. King & Co., the proxy solicitation firm that he employed.

Within 120 days of the effective date for the buyout, investors who exercised their appraisal rights are entitled to receive a statement from Dell on the number of other investors that also took the same route. The Delaware Chancery Court would then hold hearings to determine the fair value of Dell common shares, and Dell would be required to pay that amount, plus interest, once the court reaches a decision. The final amount could be more or less than what Michael Dell is paying through the buyout with Silver Lake.

To contact the reporters on this story: Sarah Frier in New York at sfrier1@bloomberg.net; Miles Weiss in Washington at mweiss@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

 

©2013 BLOOMBERG L.P. ALL RIGHTS RESERVED.

Icahn Calls Dell's Board `Horrendous' After Fight
Sept. 9 (Bloomberg) -- Billionaire Carl Icahn talks about his decision to give up his fight to control Dell Inc. Icahn, speaking with Trish Regan on Bloomberg Television's "Street Smart," also discusses the outlook for Apple Inc., Netflix Inc. and J.C. Penney Co. (Source: Bloomberg)
 

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.