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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 announcement of the official buyout proposal filed the morning of the interview reported below, and for explanations of long term plans to employees, see


Source: The Globe and Mail, May 31, 2013 interview

Go to the Globe and Mail homepage



When discussing the deal to take Dell private, founder Michael Dell treads carefully. (Kevin Van Paassen/The Globe and Mail)


Michael Dell ‘at peace’ amid turmoil as tech giant fights to go private


For a man whose company, career and legacy are on the line, Michael Dell appears remarkably calm.

Dell Inc., the technology giant he founded in his college dorm room in 1984, became synonymous with the rise of desktop computers, but now it is racing to reinvent itself in an era of smart phones and tablets.

Mr. Dell, 48, has embarked on his biggest gamble of all – turning Dell back into a private company. In February, he and private-equity firm Silver Lake Partners struck a deal to buy Dell for $24.4-billion (U.S.), a transaction that has sparked bitter opposition from some large shareholders. On Friday, the company filed its official pitch to secure shareholder approval for the move.

“It’s really about accelerating the transformation of the company,” Mr. Dell said in an exclusive interview with The Globe and Mail on Friday in Toronto, where he celebrated the 25th anniversary of Dell’s operations in Canada.

“It is my belief that the kind of investments that the company needs to make are not likely to be attractive or well-liked by most public investors,” he said, noting the steps would lower the company’s earnings and raise expenses in the short term. “Clearly there is some amount of challenge and volatility in the sector that we’re in.”

The next six weeks will be critical. On July 18, Dell’s shareholders will vote on whether to approve the deal. The lobbying by both sides promises to be fierce. On Friday, Dell filed a final and lengthy proxy statement outlining the justification for the transaction. When I admit to Mr. Dell that I have not yet read it in its entirety, he responds with just a touch of swagger.

“I’ll boil it down for you – we’re going private. Next question!”

Some of Dell’s shareholders, including the famed corporate raider Carl Icahn, would disagree with that sense of certainty. Mr. Icahn and several other large owners of Dell stock argue that the deal, which amounts to a price of $13.65 a share, is an attempt to buy the company on the cheap. On Friday, Dell shares closed at $13.35 on the Nasdaq Stock Market.

Mr. Icahn is teaming up with Southeastern Asset Management Inc. to put forward an alternative proposal, which would pay $12 a share, but would allow shareholders to keep a stake in a publicly traded Dell. Mr. Icahn has also said that Mr. Dell “is not the guy” to lead the company into the future.

Mr. Dell doesn’t waver when asked whether he has made peace with the possibility that the battle over Dell could end with him losing his job at the company that bears his name. “I knew that if I initiated this process that was one of the potential outcomes,” he said. “I was at peace with that when I started, I’m still at peace with it. I don’t think it’s going to happen.”

After all, Mr. Dell, currently chairman and chief executive officer, has always led the company. There was a brief period between 2004 and 2007 when he was chairman but not CEO, but he quickly returned to the helm. In recent years, he has moved the company away from its personal-computing past and oriented it toward a future in sales to large businesses: software, data storage, security. Those areas offer alluring potential for growth but also stiff competition.

It has been a bumpy ride. Since the start of 2007, Dell’s share price has dropped 48 per cent. Its latest quarterly earnings report, for the three months ending on May 3, came in well below investor expectations, with profit down nearly 80 per cent from the same period a year earlier. Some investors drew the conclusion that Dell’s challenges were bigger than believed; others charged that Mr. Dell had an incentive to make it appear that way in order to prod shareholders to accept a buyout.

When discussing the deal, Mr. Dell treads carefully. He portrays himself as a servant of the process, not its master. Asked whether he would play a role in the campaign to win shareholder votes, he demurred. “If the board asks me to talk to shareholders, I’d be happy to talk to shareholders,” he said. “I really have been following the advice and instructions of the board.”

Over the next six weeks, his schedule already includes trips to China, India, the United Kingdom and Russia, plus a stop in Washington, D.C., to get his daughter settled ahead of a summer internship.

He declined to respond to criticisms of the transaction and emphasized that the job of evaluating offers for the company belongs to a special committee of directors. Indeed, he used the phrase “board-led” to refer to the buyout deliberations five times in a matter of minutes.

The process of looking at offers for the company has been “incredibly robust,” Mr. Dell added. Other players have “had opportunities to make offers and we are where we are in terms of the best offer, the highest price.” One such party was private-equity titan Blackstone Group LP, which recently withdrew from the buyout process.

“The reality is that everybody agrees that the trading market has been undervaluing the company,” said Gary Lutin, who heads the Shareholder Forum, an independent organization that supports the exchange of decision-making information between companies and their shareholders. Both the proponents and opponents of going private “all think its long-term value is greater than $13.65 a share.”

Mr. Dell is a cheerleader when it comes to Dell’s future opportunities, whether helping companies to analyze the reams of data they collect about their customers or pushing ahead in “virtual client” computing, where people can access the information on their computer from any device. At the same time, he doesn’t plan to abandon the market for PCs.

“If you go to a place in the emerging market like Indonesia, and you say, ‘Let’s talk about computing,’” Mr. Dell said, customers don’t want to talk about software services and cutting-edge systems management. “They want PCs.”

Asked to consider his own legacy, Mr. Dell paused before answering. “I’m 48 years old,” he replied. “Why don’t you ask me in 20 or 30 years?”

© Copyright 2013 The Globe and Mail Inc. All Rights Reserved.

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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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