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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.



Source: The Wall Street Journal, May 6, 2013 profile


BUSINESS  |  May 6, 2013, 6:57 p.m. ET

Dell Deal Negotiator Walks Fine Line

Director Alex Mandl Squeezed Michael Dell, Others for Higher Offers but Some Big Holders Still Angry


[image] Stephen Voss for The Wall Street Journal

Alex Mandl, above in Maryland this month, is the Dell director handling discussions with prospective bidders.

Last August, Alex Mandl was hosting dinner guests in his Great Falls, Va., home when Michael Dell's number popped up on his cellphone. Mr. Mandl, Dell Inc.'s lead director, excused himself for what he expected would be a routine check-in with the Dell chief executive ahead of a quarterly earnings report.

Instead, Mr. Dell told Mr. Mandl he was discussing ways to take Dell private. Nearly 20 minutes later, Mr. Mandl returned to the table looking distracted. "Is everything OK?" one guest asked.

The phone call vaulted Mr. Mandl, a 69-year-old telecommunications veteran, into a high-stakes negotiation over the future of the computer maker, which brings in about $57 billion in annual revenue. It was a major test for an Austrian-born businessman best known for striking deals in the early days of the cellular industry.

Several large Dell shareholders oppose the $24.4 billion deal the board struck with Mr. Dell. One investor, billionaire Carl Icahn, has reserved the option to oust Dell's board, a person familiar with his thinking said.

Because Mr. Dell eventually allied himself with private-equity firm Silver Lake Partners to take Dell private, it has been up to Mr. Mandl to defuse worries that Mr. Dell had an inside track to buy the company on the cheap.

As head of a special board committee weighing the company's possible sale, Mr. Mandl has been an unflappable negotiator, has worked long hours, and dug into proposal details, said people close to the talks. "At times it certainly has been a full-time job and I have had to make adjustments," said Mr. Mandl in a recent interview in New York, wearing a crisp shirt and navy blazer. "There are still a number of uncertainties out there to work through, and we will do what we need to do to bring the result to the right conclusion for the shareholders," Mr. Mandl said.

While Mr. Mandl initially was skeptical of a buyout, he shuttled between Mr. Dell and Egon Durban, Silver Lake's point man in the buyout talks, to make sure Dell shareholders got the best deal possible, said people close to the talks.

The lead director also checked on Dell executives' conversations with would-be buyers to ensure managers were forthcoming about financial information. And he coaxed balking financiers back to the table when talks ran aground, they said.

He "is a very strong director and a very strong leader,'' said William Gray III, a Dell director and a former U.S. congressman. Mr. Mandl has had an unenviable task. Potential buyers doubted they could make money on a Dell buyout, directors lost faith in management financial projections, and PC sales fell faster than the board expected, said the people involved in the negotiations. Starting in March, at the end of a 45-day "go shop" period seeking alternative offers for Dell, Mr. Mandl haggled with private-equity firm Blackstone Group LP and investor Mr. Icahn over tentative bids.

Blackstone Group has dropped out of the bidding and Mr. Icahn isn't likely to buy Dell. That means Mr. Mandl now must keep Mr. Dell's deal on track and convince shareholders the $13.65-a-share offer is fair. Mr. Mandl already has spoken to shareholders wary of the buyout and plans to continue his outreach ahead of the shareholder vote. Dell shares closed Monday at $13.29.

"It has been as methodical and thorough a process as you could want, and that is due to Alex," said Ken Duberstein, another member of Dell's special committee.

Mr. Mandl also has run into critics. Some have said the director narrowed the list of potential buyers too soon, didn't dig deeply enough into alternatives to taking Dell private, and failed to lock up support from another investor, Southeastern Asset Management Inc., that has vocally opposed the deal.

"Southeastern has been working hard to secure a better outcome for our clients through a superior offer or a rejection of the current bid," the investment firm wrote in an April letter to its clients. Southeastern said in an April letter to its clients that Dell's board deliberations "focused on giving Michael Dell what he wants as opposed to pursuing credible better alternatives for shareholders and the business."

Mr. Mandl, who was born and lived in Austria until he was 15, moved to the U.S. with his parents and attended college here. He moved up the corporate ranks and joined AT&T Inc. in 1991 as chief financial officer.

Former colleagues credit Mr. Mandl with leading AT&T's strategy to buy its way into the cellphone market. Mr. Mandl's courtship of McCaw Cellular, for instance, resulted in a 1994 acquisition for about $11.5 billion.

The purchase "was one of the better things that AT&T did," said R. Gerard Salemme, a former McCaw Cellular and AT&T executive. "Alex was a good operator."

In 1996, Mr. Mandl jumped ship to run startup telecom firm Teligent Inc., which went bankrupt in 2001, just weeks after he was pushed out as CEO. Mr. Mandl then ran struggling French digital-security company Gemplus International SA, which he turned around before striking a $1.1 billion deal to merge with Axalto Holding NV in 2005. He is its nonexecutive chairman.

A recruiter approached Mr. Mandl about joining Dell's board. He did so in 1997 and 13 years later was named independent presiding director—essentially the boss of the board on areas where Mr. Dell had a conflict. When the Round Rock, Texas, company enjoyed good times, directors rarely challenged Mr. Dell on business strategy, said people familiar with board discussions.

In more recent years, however, these people said Mr. Mandl and other directors have pressed Mr. Dell and other executives about company strategy.

A spokesman for Dell declined to comment on the board's dealings with Mr. Dell, and said Mr. Dell also declined to comment. Larry Tu, Dell's general counsel, said Mr. Mandl "has helped guide Dell through a period of unprecedented growth and change."

When Mr. Dell informed directors about the potential of taking Dell private last summer, people familiar with the matter said Mr. Mandl was among the board members skeptical about the idea amid the company's tough attempted transition from PC and server maker to a broader corporate software and tech services provider.

Through the fall, Mr. Mandl and other directors worried whether Dell's shifting internal financial outlooks meant management couldn't accurately predict future financial performance, according to a March regulatory filing. Those concerns—and a sinking PC market—helped spur directors to accept the buyout deal, said people familiar with the board deliberations.

Mr. Mandl has since spent thousands of hours working on the negotiations. In mid-January, he salvaged negotiations with Silver Lake after private-equity firms KKR & Co. and TPG dropped out—and Silver Lake was close to walking away, said people briefed on the negotiations.

Mr. Mandl called Mr. Dell and asked if the CEO planned to stay as CEO if the buyout floundered, according to a March regulatory filing. Mr. Dell said he remained committed to the company.

That same month, Mr. Mandl spent one weekend pushing for a $1.5 billion price increase the board wanted from Silver Lake. In a flurry of phone calls, Silver Lake's point man on the deal said he couldn't budge on price and that he had to tell his partners the deal likely was dead.

"Go ahead," Mr. Mandl replied, a person close to the talks said. The next day Silver Lake agreed to raise its offer for Dell. Silver Lake declined to comment. After further back and forth, Dell said publicly in February it would go private.

Now, Mr. Mandl is planning for the shareholder vote and overseeing the board's dealings with the Securities and Exchange Commission, which must clear Dell's regulatory disclosures related to the deal. He also is prepping for the possibility of curveballs to come from Mr. Icahn, Silver Lake or Dell stockholders.

Other Dell board members said Mr. Mandl has handled the situation well given the circumstances.


Alex J. Mandl

A brief biography of Dell's lead director.

Biggest career accomplishment: Overseeing deal for McCaw Cellular as AT&T's finance chief

Biggest setback: Teligent Inc. filed for Chapter 11 a month after Mr. Mandl resigned as CEO

First job: Began his professional career as a mergers and acquisitions analyst at Boise Cascade

Education: M.B.A., University of California at Berkeley; B.A., Willamette University

Boards: Dell, Gemalto NV, Arise Virtual Solutions Inc.

—WSJ Research

Write to Shira Ovide at and Joann S. Lublin at

A version of this article appeared May 7, 2013, on page B1 in the U.S. edition of The Wall Street Journal, with the headline: Dell Deal Negotiator Walks Fine Line.

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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