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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 SEC filings of material referenced in the article and video below, see


Source: Wall Street Journal | All Things Digital, July 1, 2013 article and CNBC, July 1, 2013 video

Arik Hesseldahl

Arik Hesseldahl

ethics statement  |   bio

Icahn Makes Another Offer for Dell as Shareholders Shrug

July 1, 2013 at 3:30 pm PT




Activist investor Carl Icahn tried again to get the attention of Dell shareholders, but judging by the lack of movement in the computer company’s shares, it doesn’t seem to be working.

The day started with the release of an open letter by Icahn to Dell shareholders and the special committee of its board overseeing its efforts to go private. In that letter, which you can read in full below and which was made public in a filing with the Securities and Exchange Commission, Icahn disclosed that he had obtained more than $5 billion in financing to pay for his plan to recapitalize Dell.

Icahn’s plan basically calls for buying up 72 percent of Dell’s existing shares at $14, a price higher than the $13.65 Dell founder and CEO Michael Dell and his partner, private equity firm Silver Lake Partners, have offered for the entire company.

Icahn, in his letter, asked the board committee to “engage in a direct, face to face sit down meeting with us” and argued that the board should consider his offer a superior one made by a third party that would void a $270 million breakup fee that Silver Lake would collect under certain conditions if its $24.4 billion offer fails.

Later, after markets closed for trading in New York, Icahn, as he does every once in awhile, got on the phone with CNBC and repeated what he has said before: That if he were to gain control of Dell the company, Dell the man would be out of a job. (See the video below.)

Dell’s board committee responded by issuing a two-sentence statement saying it would be happy to look over the specifics of Icahn’s offer. Previously it has turned Icahn away, saying his plans suffered from a “liquidity gap.”

For its part, Icahn’s partner, Southeastern Asset Management, issued a statement saying Icahn’s latest offer “reinforces our view stated last week that Icahn is in the best position to lead the development of a financed alternative transaction.”

Dell shares barely moved, which suggests that most shareholders aren’t paying much attention to his efforts. The shares closed down one cent at $13.31. The shares have more or less remained range-bound since Feb. 5, when the company announced its plan to go private, trading no lower than $13.09 and no higher than $14.51.

There’s a pretty good chance that a lot of the shares — perhaps a third or more — not in the hands of Michael Dell, Carl Icahn or others with a dog in the buyout fight now belong to so-called “arbs” — investors who bought the shares at lower prices and are just marking time betting that the buyout is approved and yields a guaranteed payout. These shareholders are pretty much a lock for voting in favor of the buyout.

There’s another wrinkle in all this. Let’s say that the Dell-Silver Lake proposal fails at the meeting of shareholders on July 18. To fully get control of the company, Icahn would have to convince shareholders to fire Dell’s board of directors, too, and replace them with the slate he and Southeastern proposed on May 13.

Here’s why that won’t happen: Michael Dell is still the largest shareholder in the company. And while he can’t vote one way or the other on the buyout proposal, he will be able to vote against Icahn’s slate in a subsequent vote and would have other shareholders with him.

While there’s still a chance that the Dell-Silver Lake proposal may not get approved — the opinion of Institutional Shareholders will be crucial when it comes — the chances that Carl Icahn gets control of Dell are almost non-existent.

Below is video of Icahn’s latest chat with CNBC this afternoon, and below that his open letter to shareholders and Dell’s special board committee.



New York, New York July 1, 2013: Carl Icahn and his affiliates today issued the following letter to stockholders of Dell Inc. and members of the Dell Special Committee.

Dear Fellow Dell Stockholders AND Members of the Dell Special Committee:


We are pleased to inform you that we have obtained lender commitments for the $5.2 billion in debt financing that we said we would obtain (including $1.6 billion from Jefferies Finance LLC). Jefferies has advised us that they are completing the paperwork and the commitment letters will be publicly filed after the market close today. With that we put an end to the unwarranted speculation by Dell that our money would not be available.


With the $5.2 billion in committed debt financing, $7.5 billion from cash on the Dell balance sheet and $ 2.9 billion to be derived from the sale of receivables, Dell will have the aggregate $15.6 billion necessary to conduct our proposed self tender by Dell for approximately 1. 1 billion Dell shares at $14 per share (the “$14 Tender Offer”). Following completion of the $14 Tender Offer Dell will have approximately $4.9 billion of cash remaining. Also, our lender commitments permit an additional $1.5 billion revolver for Dell should that become necessary.

Icahn and Southeastern Asset Management have agreed not to tender into the $14 Tender Offer. Therefore, even if the $14 Tender Offer is fully subscribed, stockholders will receive $14 per share for at least approximately 72% of their Dell stock — and an even higher percentage if other stockholders believe, like us, that Dell’s best days are ahead of it and decide to hold onto their Dell shares.

If the $14 Tender Offer is fully subscribed, 670 million shares would remain outstanding. Based on the fiscal year 2015 BCG Base Case as set forth in Dell’s Proxy Statement* (and even without taking into account the cost reduction opportunities identified by BCG), we believe the earnings per share for those remaining shares would be $3.72 per share. Assuming 75% of BCG’s productivity cost reductions set forth in Dell’s Proxy Statement are attained, earnings per share for those remaining shares would be as high as $5.51 per share. In other words, in our proposal tendering stockholders would receive $14 per share for at least 72% of their shares and, based on this BCG analysis, their remaining shares would be earning between $3.72 and as high as $5.51 per share. We therefore believe that it is self-evident our proposal is far superior to the $13.65 offered by Michael Dell/ Silver Lake.**

Dell stockholders should note that, despite Dell’s recent drumbeat of rapid deterioration, the recently reported performance in 1QFY14 and management’s operational decisions particularly regarding PC pricing, Dell has not retracted its Final Fiscal Year 2014 Board Case EBITDA of $3.6 billion (as disclosed in the Dell Proxy Statement), nor any of the projected BCG cases for fiscal years 2014 to 2017. Further, based on statements by Dell’s management, we believe that Dell’s recent aggressive PC pricing discounts are designed to buy meaningful market share while sacrificing near-term margins – a strategy that we believe will benefit future owners. Senior management, including Brian Gladden, CFO, and Tom Sweet, VP Corporate Finance, both highlighted this fact on the Q1’14 earnings call:

“In many cases, these are accounts that we feel very good about [with respect to] the long-term profitability and the impact on our cash flow over time. So while we may not see that showing up as a positive in the P&L in the short term, we think for the long term it’s the right thing to do to get ourselves back in price position to scale the business,” as per Brian Gladden.

“We are investing and acquiring new customer accounts that will benefit our long-term profitability and cash flow,” as per Tom Sweet.

(emphasis added)

We therefore can only ask, based on these statements by management and the BCG analysis mentioned above, why is the Board recommending a ” freeze-out” transaction that denies stockholders the right , if they so choose, to participate in the ” long term” potential upside that Dell management themselves see for Dell.


Now that our financing is committed and in place, we call upon the Dell Special Committee to engage in a direct, face to face sit down meeting with us (not through its highly paid advisors as has occurred in the past). As always, it is our desire that our proposal be treated as a Superior Proposal made by an Excluded Person under the Merger Agreement, and thereby save stockholders $270 million in additional break-up fees that may otherwise be claimed by Silver Lake.

It is mystifying to us how any independent Board which is charged with duties as fiduciaries can recommend to shareholders a $13.65 per share ” freeze-out” merger with Michael Dell/Silver Lake as superior to a proposal that provides stockholder the choice to receive $14 per share for at least 72% of their shares and, based on their own projections and on the BCG analysis mentioned above, to own their remaining shares earning between $3.72 and as high as $5.51 per share. We believe that it would be a sad outcome for stockholders and would, to say the least, reflect terribly on all who are involved in this process if, after purchasing shares at what we perceive to be a substantially undervalued price of $13.65 per share, Michael Dell and Silver Lake earned substantial returns on their investment while other stockholders are forced to sell. It would be even worse if Dell were sold (or broken up) by Michael Dell and Silver Lake in a transaction or transactions with one or more strategic acquirers for a very large profit.

We therefore ask the Board to find our proposal to be a “Superior Proposal” or at the very least to change its recommendation regarding the Michael Dell/Silver Lake transaction

We look forward to hearing your answer in the very near future.


Carl C. Icahn
Icahn Enterprises, L.P.


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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