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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 Dell's press release, earnings call webcast and supporting presentation material, see


Source: The Wall Street Journal, May 16, 2013 article


EARNINGS  |  Updated May 16, 2013, 9:26 p.m. ET

Dell Earnings: Profit Slides as Investor Base Shifts


Dell Inc.'s investor base is shifting ahead of a shareholder vote on the company's proposed $24.4 billion buyout, as the computer maker on Thursday posted an expected drop in quarterly profit.

Several longtime Dell shareholders—including T. Rowe Price Group Inc., Brown Brothers Harriman & Co. and mutual-fund group Oakmark Funds—have recently trimmed or dumped their shares in the Round Rock, Texas, company, according to new disclosures.

At the same time, investment funds including hedge funds Highfields Capital Management LP and Taconic Capital Advisors LLC in recent days have reported fresh purchases of Dell stock during the first quarter, at lower prices than longer-term shareholders.

The changing shareholder mix comes as Dell on Thursday posted a nearly 80% decline in net income for its fiscal first quarter ended May 3. Revenue fell 2% to $14.1 billion.

The numbers were expected after The Wall Street Journal and other media reported earlier this week that Dell planned to post worse-than-expected quarterly results. Dell on Thursday said the profit decline reflected actions by the company to cut product prices and grab market share, and to spend money to hire sales staff and bolster research-and-development efforts in software and other newer businesses.

In a statement, Chief Financial Officer Brian Gladden said Dell took "actions to improve our competitive position in key areas of the business," particularly in the sharply declining PC market. The company's action "has affected profitability," Mr. Gladden added.

The poor quarterly results and changing stockholder base have implications for Dell as it heads toward a shareholder vote on a disputed effort by private-equity firm Silver Lake Partners and Michael Dell, the company's founder and chief executive, to buy out Dell stockholders in a proposed $24.4 billion deal.

Dell's board has said a stretch of poor results—and management's inability to accurately predict those results—was a significant factor in its decision to approve the buyout offer. Meanwhile, several large Dell shareholders such as Southeastern Asset Management Inc. have said the company may be exaggerating its financial weakness to allow Mr. Dell to buy the company at a fire-sale price.

Now it appears as if some shareholders aren't sticking around to find out the outcome of a vote. Brown Brothers Harriman and Oakmark Funds recently said they sold all or nearly all of their Dell shares.

A spokeswoman for Brown Brothers didn't respond to a request for comment. Oakmark in late April said it sold its Dell holdings to buy other shares "that we are more confident are undervalued."

Meanwhile, T. Rowe Price, which has opposed the buyout offer, trimmed its Dell holdings by about 5% in the first quarter, according to regulatory disclosures. A spokesman for T. Rowe Price declined to comment.

New Dell stock buyers, including hedge funds Highfields and Taconic, may be more inclined to vote for a buyout because they may have purchased shares below the $13.65-a-share buyout price offered by Silver Lake and Mr. Dell.

Taconic and Highfields declined to comment.

Some Dell shareholders who declined to be named said Thursday they are reserving judgment on the latest financial results until they see more details in coming days. These shareholders said Dell could have padded reserves or taken other financial steps to artificially depress profit margins.

Southeastern and investor Carl Icahn have proposed an alternative offer to allow Dell stockholders to continue holding company stock, and receive a one-time payout of $12 a share in cash or Dell stock. A special committee on Dell's board hasn't made a decision on the Icahn-Southeastern proposal, but in a letter this week, the board committee expressed skepticism that the duo's plan was feasible.

Mr. Icahn didn't return a call requesting comment. A spokesman for Southeastern declined to comment on the Dell directors' letter.In all, Dell said fiscal-first-quarter net income was $130 million, or 7 cents a share, compared with the $635 million, or 36 cents a share, a year ago. Dell said operating income from sales of PCs, tablets, and related products slipped 65%.

But there were bright spots that may provide ammunition to investors such as Mr. Icahn who want to continue owning Dell stock. The company said revenue from selling software and other types of corporate-technology services rose 8% from a year earlier, excluding the effects of an acquisition.

Dell's stock closed at $13.43 as of the 4 p.m. market close and was off 7 cents in after-hours trading.

Write to Shira Ovide at and Ian Sherr at

Corrections & Amplifications
Dell's fiscal first quarter revenue fell 2% to $14.1 billion. An earlier version of this article incorrectly said revenue rose 2%.

A version of this article appeared May 17, 2013, on page B3 in the U.S. edition of The Wall Street Journal, with the headline: Dell's Profit Slides as Investor Base Shifts.

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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