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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 slide presentation of Michael Dell referenced in the article below, see

Note: The initial 8:52am version of this article had been distributed to Forum participants.


Source: The Wall Street Journal, June 21, 2013 article


TECHNOLOGY  |  Updated June 21, 2013, 6:07 p.m. ET

Michael Dell Presses Case for Buyout


Michael Dell is making himself a pitchman for the $24.4 billion deal he says is needed to salvage Dell Inc.

Color China Photo/Associated Press

Dell chief Michael Dell, right, visited a new manufacturing plant in Chengdu, China, on June 6.



The computer maker's chief executive has barely talked publicly about the proposed deal struck in February to take Dell private—a controversial transaction that has become in part a referendum on Mr. Dell's stewardship of the company he founded nearly 30 years ago.

On Friday, however, Mr. Dell laid out in an eight-page presentation to investors why he believes his company needs time away from the scrutiny of public shareholders to push through a corporate turnaround that so far has found a rough road.

"As a public company, we must take a more cautious approach to our transformation, because we must consider how our stock price will react to the steps we take and what effect that will have on the company and on customers and employees," Mr. Dell says in the presentation, which was filed with the Securities and Exchange Commission. "This hurts the speed and efficacy of the transformation and isn't good for the long-term health of the company."

The presentation—titled "The Rationale for a Private Dell"—adds more detail to prior disclosures about pressures the company is facing. It states that the personal-computing market is deteriorating faster than expected, and Dell hasn't yet been able to make up the difference with newer businesses selling corporate software, computing storage and other services to companies. Dell's market share in software and services, for example, remains less than 1%, the document states. The company also is threatened by potential margin erosion from competition in sales of server systems, and the company's share of the market for storage systems has deteriorated since Dell ended a reseller relationship with EMC Corp., it adds.

Mr. Dell said the company may need more cash, and is better off with a duo of determined equity holders—himself and partner Silver Lake Partners—rather than public stockholders.

The presentation lays out many of the same arguments made for months by Dell directors, who voted to approve the buyout. But this is the first time Mr. Dell is making the case on his own.

According to a person familiar with the matter, Mr. Dell released the investor presentation because he is meeting with Institutional Shareholder Services, which advises stockholders how to vote on deals and other corporate issues. People familiar with shareholder discussions believe the recommendation of ISS may be the swing factor in whether the Dell buyout is approved or defeated.

He plans to meet soon with Dell stockholders to personally make his pitch, according to a person familiar with Mr. Dell's plans.

Taking his buyout views directly to shareholders shows the stakes for Mr. Dell, who is risking part of his personal fortune and his reputation as a pioneering technology entrepreneur. He pledged $4.5 billion of his cash and Dell stock toward the proposed buyout.

The buyout is facing loud opposition from investor Carl Icahn and some other Dell stockholders. The opponents say Mr. Dell is unfairly taking advantage of a low point in his company's fortunes to buy Dell on the cheap.

Mr. Icahn said Mr. Dell's arguments are self-serving. "I have one simple question: If the company is so bad, why is Mr. Dell fighting so hard to buy it?" he said in an interview Friday.

Some of the company'slong-term shareholders have said their investments have subsidized Dell's push into newer business lines like computing storage and software, and they believe the buyout deal strips them of a chance to reap rewards if those businesses pan out.

But repeatedly in the investor pitch, Mr. Dell mentions concerns that employees and companies that buy Dell products will be unnerved if Dell stays public and is subject to further punishing stock-market declines.

People familiar with Mr. Dell's discussions have said he has spent time before and after the buyout was struck in February talking to Dell customers and assuring them he has their best interests at heart.

If shareholders approve the buyout deal in a vote slated for July 18, Mr. Dell would own the majority 2of Dell's stock—giving him much greater influence over the company and its strategy than he has had. Now, Mr. Dell and affiliates hold roughly 16% of Dell's publicly traded shares.

It isn't clear that Mr. Dell's pitch will sway investors who feel shortchanged by the buyout. Some already have gotten phone calls from advisers working for Dell directors to urge them to vote for the buyout.

They will soon be hearing from Mr. Dell too, and likely from Mr. Icahn, who this week floated a proposal for Dell to stay public and buy back up to $16 billion in stock with the help of debt Mr. Icahn is seeking to borrow.

People familiar with the conversations with Dell shareholders say they believe they can win support for the buyout from a majority of Dell's stockholders. But the vote is complicated by Mr. Dell not being allowed to vote his stake for the deal, and by the continued pressure by Mr. Icahn.

Dell shares closed trading Friday at $13.35, down 1 cent. The stock price continues to trade below the $13.65-a-share deal price, in a sign market participants believe the buyout will clear the shareholder vote next month.

The presentation states that Mr. Dell would oppose an effort to borrow money and keep at least some Dell shares publicly traded, a type of transaction that Mr. Icahn has supported.

"Adding substantial debt to the company while leaving it as a public company would decrease the company's financial flexibility and hurt the company's ability to weather an economic or business downturn," Mr. Dell said.

Deal watchers have wondered whether Mr. Dell would want to stay as CEO if company shareholders reject his buyout deal. In the presentation, Mr. Dell said if the deal vote goes against him, he would "remain committed to doing my utmost for the company."

Write to Shira Ovide at

A version of this article appeared June 22, 2013, on page B4 in the U.S. edition of The Wall Street Journal, with the headline: Michael Dell Presses Buyout Case.

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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