2014, 10:32am CDT
shareholders push back in buyout share price appraisal case
Michael Dell speaks to attendees at the Dell World 2013
conference at the Austin Convention Center.
shareholder advocacy group is asking
Dell Inc. to withdraw a long list
of demands for documentation that they allege could bog down a
requested appraisal on the company buyout share price.
York-based Shareholder Forum requested that Dell's attorneys withdraw
the court filing request for additional documentation,
according to a July 14 letter. A
minority of more than 100 Dell shareholders are exercising their right
for an appraisal rather than accepting the $13.75 share price that CEO
Michael Dell and his investor
group paid other shareholders during the October 2013 buyout that took
the company private.
process is being managed by
J. Travis Laster, a vice
chancellor in the Delaware Chancery Court, the
New York Times reported Saturday.
this month, Dell’s lawyers requested from the minority shareholders a
massive amount of records covering more than a three-year period —
from January 2011 through May. But the Shareholder Forum, an
independent moderator founded in 1999 by the New York Society of
Security Analysts, has asked
Michael Dell to request that his
lawyers withdraw the document request.
Michael Dell to assume
responsibility for his company’s respect of investor rights,”
Shareholder Forum Chairman
Gary Lutin, a former investment
banker, said in an interview with Austin Business Journal. “This
appears to be intended to impose burdens that would be very
significant to a professionally managed fund, which would discourage
such shareholders to volunteer themselves as fiduciaries in an
David Frink said Sunday that
“Dell has served requests for documents on the named plaintiffs that
filed suit against Dell. Discovery of this nature is usual in
appraisal cases such as this one. Beyond this, we do not intend to
comment on the pending litigation.”
Petitioners in the case include Baltimore-based
T. Rowe Price Group Inc. (Nasdaq:
TROW), once Dell's third-largest shareholder.
Michael Dell initiated the $24.9
billion buyout in February 2013. But he quickly ran into opposition
when activist investor
Carl Icahn joined forces with
another buyout firm,
Southeastern Asset Management
Inc., in buying up Dell stock and claiming the initial amount offered
Michael Dell, $13.65 per share,
undervalued the company.
He subsequently upped his offer.
large number of shareholders abstained from voting on the buyout,
requested the rules be changed so non-votes
would not be counted in the final tally instead of counting towards a
rejection of his offer.
Andrew Whinston, a
University of Texas professor in
the Department of Information, Risk, and Operations Management, said
it’s likely that
Michael Dell will at some point
launch an initial public offering again at a higher valuation,
creating a windfall for himself and investor
Silver Lake Partners.
his [eventual] goal, to go public at $24 [per share] or $25,” Whinston
said. “It’s a big financial gamble.”
Calnan covers technology, finance and clean energy for the Austin
2014 American City Business Journals.