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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 Dell special committee's press release and 39-slide presentation reported in the article below, and for reports of the referenced presentations of Dell managers to industry audiences, see


Source: The Wall Street Journal, June 5, 2013 article


TECHNOLOGY  |  June 5, 2013, 10:07 a.m. ET

Dell Committee Says Icahn Proposal Is Nearly $4 Billion Short


Dell Inc. directors and their advisers plan to tell stockholders a proposed alternative to the PC maker's controversial buyout deal isn't financially feasible without nearly $4 billion more in financing.

Dell's board and its advisers prepared a 37-slide presentation, filed Wednesday with the Securities and Exchange Commission, as they prepare to convince shareholders to approve the $24.4 billion effort to take Dell private. Part of their shareholder campaign will be to swat down an alternative transaction proposed last month by Dell stockholders Southeastern Asset Management and Carl Icahn.

Mr. Icahn and Southeastern were unavailable Wednesday for immediate comment on the committee's comments.

The duo has said Dell shareholders should vote against the buyout led by Silver Lake Partners and Dell Chief Executive Michael Dell, and instead back a so-called leveraged recapitalization that would leave some stock in the hands of public shareholders. Mr. Icahn and Southeastern also propose using Dell's own cash and receivables, plus about $5.2 billion in new debt, to pay stockholders a $12-a-share dividend in cash or Dell stock.

But the investor presentation says the Icahn-Southeastern proposal doesn't take into account about $1.4 billion in debt Dell must repay by next April, nor the $450 million termination fee Mr. Icahn and Southeastern must pay to bust up the Silver Lake-Mr. Dell deal. The presentation also says the dissident shareholders' proposal lowballs how much cash—about $1.5 billion—Dell needs at minimum to operate its business.

To close the gap, the presentation estimates Mr. Icahn and Southeastern need roughly $3.9 billion more financing than they have proposed, or they must cut the proposed stockholder dividend to about $8.50 a share, from $12 a share.

Dell's special committee so far has been skeptical about the duo's proposal, but the investor slides are the clearest indication yet of how directors will convince Dell shareholders not to be swayed by Mr. Icahn and Southeastern. The special committee of Dell's board, and their J.P. Morgan bankers, have to both make the Icahn-Southeastern alternative look unappealing, and prove the merits of the buyout to some skeptical stockholders who believe the deal shortchanges them.

To bolster the deal, Dell's board continues to present a stark picture of Dell's rough road as it tries to shift from a company reliant on sales of personal computers to a broader seller of software and technology services to corporations. The Dell directors need to convince stockholders they're better taking an assured $13.65 for each share, rather than take a chance on holding on to Dell stock and hoping the company can pull off a turnaround.

Dell shares added a penny to $13.43 in early trading Wednesday.

The presentation said Dell's corporate-technology offerings—the central flank of Dell's growth strategy—so far are generating paltry profit margins, and face major competition in areas such as corporate-computing servers and new technologies reliant on online-accessed computing power known as cloud computing.

The scary picture of Dell's prospects contrasts with the optimistic outlook coming from Dell executives this week at a Silicon Valley conference for the company's corporate-technology customers.

—Drew FitzGerald contributed to this article.

Write to Shira Ovide at

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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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