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The Shareholder Forumtm

special project of the public interest program for

Fair Investor Access

Supporting investor interests in

appraisal rights for intrinsic value realization

in the buyout of

Dell Inc.

For related issues, see programs for

Appraisal Rights Investments

Fair Investor Access

Project Status

Forum participants were encouraged to consider appraisal rights in June 2013 as a means of realizing the same long term intrinsic value that the company's founder and private equity partner sought in an opportunistic market-priced buyout, and legal research of court valuation standards was commissioned to support the required investment decisions.

The buyout transaction became effective on October 28, 2013 at an offer price of $13.75 per share, and the appraisal case was initiated on October 29, 2013, by the Forum's representative petitioner, Cavan Partners, LP. The Delaware Chancery Court issued its decision on May 31, 2016, establishing the intrinsic fair value of Dell shares at the effective date as $17.62 per share, approximately 28.1% more than the offer price, with definitive legal explanations confirming the foundations of Shareholder Forum support for appraisal rights.

Each of the Dell shareholders who chose to rely upon the Forum's support satisfied the procedural requirements to be eligible for payment of the $17.62 fair value, plus interest on that amount compounding since the effective date at 5% above the Federal Reserve discount rate.

Note: On December 14, 2017, the Delaware Supreme Court reversed and remanded the decision above, encouraging reliance upon market pricing of the transaction as a determination of "fair value." The Forum accordingly reported that it would resume support of marketplace processes instead of judicial appraisal for the realization of intrinsic value in opportunistically priced but carefully negotiated buyouts.



For the press release issued by the Special Committee of the Board of Directors of Dell Inc., which has engaged its own public relations adviser, and its full copy of the referenced letter from Icahn Enterprises L.P., see


Source: The Wall Street Journal Deal Journal, March 7, 2013 article


WSJ Blogs

Deal Journal

An up-to-the-minute take on deals and deal makers

March 7, 2013, 7:23 AM 

Carl Icahn Ratchets Up Dell Fight With Dividend Proposal, Proxy Threat

Carl Icahn has lobbed a bomb into Dell Inc.’s go-shop period.

Bloomberg News


The special committee negotiating Dell’s buyout confirmed this morning that the billionaire has taken a “substantial” position in the PC maker and has his own ideas about how to deliver cash to shareholders.

Icahn sent the committee a letter that includes those ideas and ratchets up the rhetoric in this month-long fight. He feels the buyout price is low and his idea is better, so the board should toss out the Michael Dell buyout. If they don’t do that, he demands the board in essence put his proposal to a vote of shareholders by allowing them to vote on who makes up the board. And he threatens “years of litigation” for the special committee if it fails to heed his words.

“We believe, as apparently does Michael Dell and his partner Silver Lake, that the future of Dell is bright,” Icahn’s letter said. “We see no reason that the future value of Dell should not accrue to ALL the existing Dell shareholders – not just Michael Dell.”

The board’s committee reiterated it is conducting a robust go-shop period to find other suitors.

“We welcome Carl Icahn and all other interested parties to participate in that process,” the statement said. “Our goal is to secure the best result for Dell’s public shareholders — whether that is the announced transaction or an alternative.”

The threat of litigation has hung over this management buyout from nearly the day it was announced. Management-buyouts are likely to face shareholder lawsuits – as are nearly every M&A transaction these days – and since shareholders have vocally opposed it, a court battle was always possible but Icahn is the first to vocalize.

Icahn’s idea of a paying shareholders a special dividend and allowing them to continue holding the stock to reap the rewards of a turnaround is similar to Southeastern Asset Management’s earlier plan.

Icahn calls for a $9 special dividend to be paid largely with overseas cash repatriation and new debt. But Icahn adds a unique suggestion for the company to use its existing receivables, cash it is promised by contracts but hasn’t received, and to use that to backstop a loan from a bank. Factoring is a common bank loan, but not typical for a giant corporation like Dell.

Using some analysis, Icahn says current shares, after his maneuvering, would be worth $13.81 and coupled with his dividend give a $22.81 value to shareholders.

But while others have ranted about the $13.65 buyout deal not being fair price, Icahn urges the special committee to allow his proposal to be voted on, a new level of shareholder demand.

He proposes the board throw out the deal and agree his proposal is better. But if they don’t he wants a proxy fight to be allowed in, so he can propose a new board that would carry out his plan if shareholders vote down the buyout.

Icahn even pledges to lend $3.25 billion of his own money, on “commercially reasonable terms,” if the company is in need of bridge financing should the deal be voted down. He also pledged $2 billion loan from his company.

Update: This post has been updated to include the special committee’s response and to change that Icahn called his stake “substantial” not “sizable.”

Copyright ©2013 Dow Jones & Company, Inc. All Rights Reserved


This project was conducted as part of the Shareholder Forum's public interest  program for "Fair Investor Access," which is open free of charge to anyone concerned with investor interests in the development of marketplace standards for expanded access to information for securities valuation and shareholder voting decisions. As stated in the posted Conditions of Participation, the Forum's purpose is to provide decision-makers with access to information and a free exchange of views on the issues presented in the program's Forum Summary. Each participant is expected to make independent use of information obtained through the Forum, subject to the privacy rights of other participants.  It is a Forum rule that participants will not be identified or quoted without their explicit permission.

The management of Dell Inc. declined the Forum's invitation to provide leadership of this project, but was encouraged to collaborate in its progress to assure cost-efficient, timely delivery of information relevant to investor decisions. As the project evolved, those information requirements were ultimately satisfied in the context of an appraisal proceeding.

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