Dell Says $25B Buyout Didn't
Law360, New York (December 02,
2013, 5:54 PM ET) -- In the wake of
Dell Inc.'s controversial decision to go private, the computer maker
is fighting back against shareholders' accusations that the transaction
undervalued the company in an attempt to skimp on investor payouts.
The demand for a stock appraisal by a Delaware Chancery Court, filed Oct.
29 by Cavan Partners LP, stems from Dell's $24.9 billion buyout by founder
Michael Dell and private equity firm Silver Lake Partners, which offered
investors $13.75 per share with a dividend worth 13 cents per share.
Dell, in its Nov. 25 response, denied all accusations lodged against it by
the group of shareholders seeking a larger payout, arguing that Cavan
Partners failed to state a claim.
Cavan Partners held 100 shares, according to documents filed in court. The
computer maker's largest shareholder was
T. Rowe Price Equity Income Fund with about 16.5 million shares,
according to court documents.
Representatives from Cavan Partners and Dell were not immediately
available for comment Monday.
Dell, once the world's premier PC company, has struggled to shore up
business as the proliferation of smartphones and tablet computers eats
away at its bottom line. Since 2000, the company's share price has
languished after peaking past $50 per share — eventually making way for
the buyout bid that ultimately won over investors.
Michael Dell and Silver Lake first
unveiled their purchase plans in February, promising
one of the biggest leveraged buyouts since the financial crisis chilled
deal-making a half-decade ago. The offer gave shape to interviews with the
company's founder dating back about three years, in which he suggested he
would take the company private if it couldn't compete with fast-rising
In March, on behalf of Cavan Partners, shareholder rights group The
Shareholder Forum sought information from Dell relating to the buyout,
including a list of shareholders and how many shares they hold as well as
correspondence with billionaire activist investor Carl Icahn and with the
three investment banks advising on the deal. Dell shot down the request,
claiming the group was after “access to the boardroom” and fell short of
Delaware’s standard for books-and-records requests.
Shareholders in September
voted to approve the deal after Chancellor Leo E.
Strine Jr. of the Delaware Chancery Court upheld
last-minute tweaks by Dell's board to voting rules and record
date, dousing a stiff and
well-publicized opposition campaign that was already
In October, Icahn
laid down his
last arms in his fight to thwart the takeover, scrapping his
demand for an appraisal on more than 150 million Dell shares. The move
effectively assured that Dell would retreat from the public markets
without further incident, and on schedule.
Dell is represented by Gregory Williams and John Hendershot of
Richards Layton & Finger PA.
Cavan Partners is represented by Jeremy Anderson and Erin C.E. Battersby
Fish & Richardson PC.
The case is Cavan Partners LP v. Dell Inc., case number 9046-CS, in the
Court of Chancery of the State of Delaware.
--Additional reporting by Karlee Weinmann and Drew Singer. Editing by
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