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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 proposal letter addressed in the column and article below, see


Source: The Wall Street Journal, May 10, 2013 column and article


HEARD ON THE STREET  |  Updated May 10, 2013, 9:54 p.m. ET

Icahn Plan Doesn't Dell-iver


Carl Icahn's missives ain't what they used to be.

Dell's stock rose less than 1% Friday after the activist investor released an alternative proposal for the personal-computer maker to return a ton of cash to shareholders and remain a public company. Mr. Icahn says his plan, put together with top outside shareholder Southeastern Asset Management, would help deliver "upside" for Dell shareholders. More likely, it's just a scare tactic to pressure Silver Lake Partners and Michael Dell to add a few quarters to their $13.65-a-share buyout bid.

Considering how little leverage Mr. Icahn and Southeastern have, it looks like a long shot.

Mr. Icahn would use Dell's existing cash hoard and borrow an additional $5.2 billion to finance a $12-a-share payout, which shareholders could take in the form of cash or shares. The argument is that those electing to keep some stock would end up winners when Dell's challenged business improves.


Carl Icahn


But could Mr. Icahn and Southeastern really help lead that turnaround? Their proposed changes include cost savings from cutting the number of PC models that Dell sells. They also want the company to invest in its business selling enterprise gear. That will be much harder under the weight of huge, new debts. Nor does the pair have a management team it can offer up as an alternative.

It is unfair to Dell shareholders that, in effect, their own chief executive stopped working for them the instant he put his own bid on the table. But here they stand. Upside, to use Mr. Icahn's phrase, looks like a risky proposition. His threat of litigation, which itself could be interpreted as a sign that the investment case is weak, looks unlikely to scare anyone. Dell's board shopped the business to plenty of other buyers, all of whom passed, including Blackstone Group with its own stub-equity plan.

If Mr. Icahn ends up forcing Mr. Dell and Silver Lake to sweeten their bid a touch, that's gravy for shareholders. But with a decent offer already on the table, investors shouldn't bank on more.

Write to Rolfe Winkler at

A version of this article appeared May 11, 2013, on page B14 in the U.S. edition of The Wall Street Journal, with the headline: Icahn's Plan Just Doesn't Dell-iver.

BUSINESS  |  Updated May 10, 2013, 9:01 p.m. ET

Icahn's Alternative Offer: Oust Michael Dell

Computer Maker's Board Considers Proposal That Could Call for Founder's Exit; Potential Proxy Battle Looms


Dell Inc. directors said they would review an alternative offer by two large shareholders to a proposed $24.4 billion buyout of the computer maker, which could potentially oust Chief Executive Michael Dell in the process.

If the board doesn't back their offer, Mr. Icahn and Southeastern said they would nominate new potential directors to replace Dell's current board, raising the prospect of a proxy fight.

Mr. Icahn also took to the airwaves Friday to argue that Mr. Dell is no longer the right person to lead the company, in view of what the letter called "significant technological and strategic misses" by management and the "absurd bargain" Dell's founder would reap in the pending transaction.

"If our board is elected, [Mr. Dell] is not going to be running the company. I can guarantee that 100%," Mr. Icahn said in a CNBC interview.

A spokeswoman for Mr. Dell declined to comment.

The investors' proposal adds to the issues facing directors of the ailing computer maker, which in February announced a proposal by Mr. Dell and private-equity firm Silver Lake Partners to buy all of Dell's publicly held stock at $13.65 each. Some Dell shareholders have said the deal undervalues the company, and the Icahn-Southeastern plan may offer those buyout opponents an alternative road map.

Before a shareholder vote this summer on the Silver Lake-led deal, there is likely to be more machinations and lobbying of wary shareholders, making the final outcome difficult to predict. It is also possible Silver Lake and Mr. Dell could offer Mr. Icahn and Southeastern a financial incentive to drop or alter their offer.

Dell shares rose 13 cents Friday, or less than 1%, to $13.45. The stock has consistently traded below the buyout offer price, in a sign investors aren't betting on a successful alternative to the Silver Lake-Mr. Dell offer.

Some Dell shareholders said Friday they supported the Icahn-Southeastern offer. "I see it as an upgrade," said Donald Yacktman, president of Yacktman Asset Management LP. The investment firm held about 1% of Dell's stock as of March 31.

Dell hasn't set a date for a shareholder vote on the Silver Lake-led buyout, but people familiar with deal deliberations say it is likely to be in July. In their letter to the board, Mr. Icahn and Southeastern urged Dell directors to let company stockholders vote on the Silver Lake-led deal at the same time as an annual shareholder meeting, at which Mr. Icahn and Southeastern expect to propose a new slate of directors.

People briefed on Dell board deliberations say directors aren't obligated to hold an annual meeting before mid-August, and they are unlikely to agree to hold a deal vote and the annual meeting at the same time.

If the votes aren't concurrent, that means shareholders would have to take the risk on voting no on a Dell buyout, before Mr. Icahn or potential new directors elected with his backing have a chance to act on his buyout alternative.

The question is whether shareholders would take the risk of turning down a guaranteed payout now in the form of the Silver Lake-led buyout, in the hopes the company could be worth more down the road if Mr. Icahn and Southeastern succeed in their bid to keep Dell shares in the hands of public investors.

Mr. Yacktman acknowledged that if shareholders vote against the deal, Dell's stock price is likely to go down. "We have a very long time horizon," he said in an interview.

People familiar with Dell's board deliberations have said they considered options to keep a portion of Dell shares public and pay out a large dividend by borrowing money—a step known as a leveraged recapitalization, as Mr. Icahn and Southeastern are proposing.

Those people said the board ruled out those options in part because directors worried it was too risky to both keep Dell public and burden Dell's business with debt.

Deal watchers have wondered whether Silver Lake and Mr. Dell would raise their offer to win over skeptical shareholders or offer some kind of noncash sweetener such as a "contingent value right," a mechanism to give shareholders an extra payment if Dell, for example, went public again above a certain valuation.

People familiar with the matter say there have been no serious discussions about such deal sweeteners. Those people said it is unlikely Silver Lake or Mr. Dell would consider deal enhancements until closer to the deal vote, if shareholder opposition remains strong.

Mr. Icahn proposed a preliminary counter bid for Dell in March, which he is no longer pursuing. He offered to acquire no more than 58% of the company's stock at $15 a share, with the remainder of the shares staying in the hands of public investors. Both he and Southeastern also have previously proposed that Dell opt for a leveraged recapitalization instead of a buyout.

Their letter points to some changes that Mr. Icahn and Southeastern would like to bring to Dell's business, including reducing the number of PCs it sells, reducing its fulfillment centers and possibly returning some manufacturing to the U.S. from Asia. It also mentions the possibility of spinning off business units.

—Sharon Terlep and Joann S. Lublin contributed to this article.

Write to Shira Ovide at

A version of this article appeared May 11, 2013, on page B3 in the U.S. edition of The Wall Street Journal, with the headline: Icahn's Alternative Offer: Oust Michael Dell.

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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