Simply Defined Choices for Dell Investors
Since Dell has given its shareholders another few days to decide what
they want, I’ve been encouraged to present a simplified definition of
your practical choices.
The alternatives summarized below are based on remarkably similar
discussions with a wide range of Forum participants, including
familiar professionals as well as several individual investors who are
new to corporate control contests. While focused on the specific Dell
situation, the general definition of choices may also be applied to
other buyouts we will be addressing.
Most investors want one of these alternatives:
– If you want the “safe” cash offer, your obvious choice is to vote in
favor of the proposed transaction.
Fair value option
– If you want the appraised fair value alternative to the cash offer
price, or at least the right to consider the option, there are two
ways to get it. The one supported by the Forum
and encouraged by Icahn
is to arrange the required delivery of a demand letter to Dell and
vote against the transaction (or abstain, or simply not vote). The
alternative for those of you who cannot get your demand delivered to
Dell by the adjourned Wednesday deadline is to vote in support of the
transaction so that others will be able to secure appraisal rights
that you can buy.
– To support a proxy fight instead of the more predictable cash or
fair value alternatives available from a buyout, you can simply vote
against the transaction.
Increased offer price
– Although it is probably too late in the Dell game for bluffing, you
could theoretically threaten a negative vote to encourage the buyer
group’s revision of terms. Of course, your actual vote would
ultimately be based on the three real choices above.
These choices need to be considered in the practical context of your
particular investing objectives, as well as a realistic understanding
of probabilities in a control contest. The Dell contest has been
characterized by an exceptional level of rumors and confusion, fueled
by a special committee’s unusual efforts at promotion as well as by a
champion agitator, and it is important to sort through all the noise
to make a rational analysis.
These decision alternatives, and many other lessons from the Dell
project, will be applicable to other buyout proposals.
As some of you know, the Forum has begun reviews of other potential
appraisal rights opportunities suggested by participants. This has
naturally stimulated thinking about ways to organize the process of
selecting potential subjects for support, probably using some
variation of a workshop or review panel of invited professionals to
assure effective identification and consideration of candidates. I
will naturally welcome the views of Forum participants who want to
benefit from investing in appraisal rights.
It should be emphasized that our development of an ability to support
efficient management and marketability of these rights has created a
new type of specialized investment, and that all of us who want to
profit from it share a common interest in establishing a sound
foundation for its broad acceptance. That will require doing
everything right, including the selection of sound demonstration
GL – July 20, 2013
Chairman, The Shareholder Forum
575 Madison Avenue, New York, New York 10022