Dell Investors Line Up For
T. Rowe, Magnetar Among Those
Reserving Right To Seek Appraisal In Dell Buyout
Nov. 27, 2013 5:02
Investors with claims on more than 47.5 million Dell Inc. shares have
reserved the right to ask a judge to award them more than the buyout
price, in the latest example of investors trying to use the courts to
nab a better outcome in a deal.
investors, named in a filing by Dell this week in Delaware court, in
September voted against the company's sale to
and private-equity firm Silver Lake Partners, and sent a letter to the
company preserving their right to seek so-called appraisal of their
shares. Most have not yet actually done so.
have until about the end of the year to change their mind and take the
cash offered in the deal. Or, if they don't, they have another two
months after that to bring an appraisal claim in court.
Appraisal is a legal process that lets shareholders who voted against
a cash-out deal ask a judge to determine the fair value of their
stock. It has recently become a more popular strategy for hedge funds
and other investors willing to wager they can get more in court.
Downsides of the strategy include the risk of getting less from a
judge and the time waiting for the court to decide.
largest holder on the list is
T. Rowe Price
holds more than 30 million shares across its own funds and about a
million more on behalf of clients, according to the court filing.
large investors angling for appraisal include the New York state
Common Retirement Fund, with 4.3 million shares, and affiliates of
John Hancock Life Insurance Co. and hedge fund Magnetar Capital LLC,
with about 3.8 million each, the filing said.
has challenged the validity of potential appraisal claims for more
than 6.2 million of the shares, mostly claiming that the investor in
question didn't satisfy a requirement to hold the stock continuously
in the weeks leading up to the deal's closing. A spokesman for Dell
declined to comment beyond the filing.
$25 billion buyout narrowly survived a shareholder insurgency rallied
by Carl Icahn
and Southeastern Asset Management Inc. Mr. Icahn urged shareholders to
seek appraisal but said last month that he would take the deal cash
Southeastern sold about half its approximately 8% stake to Mr. Icahn
in June at a discount to the then $13.65-per-share offer price.
Southeastern doesn't appear on the court-filed list of investors,
suggesting it sold the remainder of its stake into the deal. A
representative wasn't immediately reached for comment.
Dell and Silver Lake closed their acquisition of the technology
company Oct. 30, hoping to continue in private its shift from a PC
maker to a provider of corporate software and services.
Rowe Price, Magnetar and the other Dell investors are the latest to
see potential upside in appraisals. Hedge-fund firms like Merion
Investment Management LP, Hudson Bay Capital Management LP and Merlin
Partners LP are testing their luck challenging recent deals including
KKR & Co.'s acquisition of Gardner Denver Inc., BMC Software Corp.'s
private-equity buyout, and Dole Food Co.'s sale to its founder.
Write to Liz Hoffman at
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