‘Voting Mix-Up'Causes T.Rowe to Lose Dell Appraisal Suit
Corporate Law & Accountability Report
May 12 — Several
T.Rowe Price & Associates Inc. funds can't proceed on an appraisal
lawsuit arising out of Dell Inc.'s 2013 buyout, the Delaware Chancery
held May 11.
Vice Chancellor J.
Travis Laster ruled that the 14 petitioners—T.Rowe Price mutual funds
or institutions that relied on T.Rowe to direct the voting of their
shares—hadn't complied with the “Dissenter Requirement” of the state's
Under Delaware law,
stockholders that vote in favor of a merger can't seek an appraisal
over how much their shares are worth.
Although T.Rowe Price
had opposed the deal, the court found evidence in the record showing
that a “voting mix-up” caused the petitioners' shares to be voted
“for” the merger.
T.Rowe Price's claims, ruling that the petitioners weren't entitled to
more than the merger price. In his detailed ruling, the judge also
provided guidance on how the court will examine whether the Dissenter
Requirement is met in appraisal proceedings.
Bloomberg BNA, which
relied on T.Rowe Price to vote its Dell shares, was a petitioner in
‘Shifting the Burden.'
shares were held in the name of Depository Trust Co.'s nominee, Cede &
Co. In what the court called a “daisy chain of authorizations,” T.Rowe
Price had contracted with Institutional Shareholder Services to
collect and submit its voting instructions to Broadridge Financial
Solutions Inc., who had the power of attorney to execute proxies.
According to the
court's decision, T.Rowe Price's instructions to vote against the
merger were inadvertently deleted and replaced.
the case from two 2015 chancery court decisions that found a
petitioner had met its initial burden under the Dissenter Requirement
by showing that Cede held a sufficient number of shares that weren't
voted in favor of the merger to cover the appraisal class (13 CARE 85,
Laster clarified that
after a petitioner has shown that Cede held the requisite number of
shares, the company can rebut by showing that Cede actually voted the
shares in favor of the merger.
The judge found that
unlike the circumstances in the 2015 chancery court decisions, here
there was evidence on how Cede had voted the petitioners' shares.
“It simply is not
true that it is impossible to determine how Cede voted the shares over
which the T. Rowe Petitioners exercised voting authority,” he wrote.
“When questions arose about how the shares were voted, T. Rowe, ISS,
and Broadridge all acted as if they could identify the shares and how
they were voted, and they came to the conclusion that Broadridge voted
the shares ‘FOR' the Merger.”
To contact the
reporter on this story: Michael Greene in Washington at
To contact the editor
responsible for this story: Yin Wilczek at
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