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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.



The commentary below addresses questions raised about the fairness of recently evolved "majority of minority" voting practices, particularly concerning the unintended imbalance favoring one proponent over another in a proxy contest. For other legal and investor views of voting standards, see


Source: The Wall Street Journal MoneyBeat, July 25, 2013 commentary





10:47 am
Jul 25, 2013


Dealpolitik: A Fair Solution to the Dell Quagmire



The Dell deal has become a bit of a mess. Twice Dell has put off its shareholders’ meeting because it has been unable to get the votes to approve Michael Dell’s and Silver Lake’s $13.65 per share cash buyout of Dell. On Wednesday, the buyout group proposed to change the rules of the game—which they had agreed to months ago—to make the required vote easier to obtain in return for a relatively insignificant price increase of ten cents per share.

Although Dell’s special committee legally could say yes to this last minute gambit if it jumps through the right hoops, it is not clear it is a good idea.

First, it looks bad to change the rules the buyout group and the special committee have been following for months. Of course dissenters Carl Icahn and Southeastern Asset Management have screamed bloody murder over the last-minute change. They are trying to convince shareholders to defeat the buyout, throw the incumbent board out at Dell’s annual meeting and implement their alternative: a recapitalization plan that would see the company use its cash and newly borrowed funds to buy back most, but not all of the outstanding shares.

Perhaps more important, the easier voting standard may not solve anything. It is not clear that the buyout has enough support among shareholders to pass even with the more liberal threshold. And if it doesn’t, then Dell will immediately head into another proxy fight in which Icahn and Southeastern seek to replace the board.

The bottom line is that most shareholders might want to see a transaction, but disagree as to which transaction to pursue. There seems to be a fair and logical solution to this problem giving each competing group a shot at what it wants: Have the annual meeting at the same time as the vote on the buyout so shareholders effectively have a choice as to which deal to implement, just as Icahn and Southeastern have demanded.

If shareholders vote in favor of the management buyout, then it will happen. However, shareholders will be offered at the same time the alternative of installing the Icahn/Southeastern director nominees. And if shareholders prefer to keep Dell as a public company in its current state—which seems to be Mr. Dell’s Plan B based on a letter he wrote to Dell shareholders Wednesday night–they can vote against both proponents and send Mr. Dell back to working for public shareholders.

As to the vote required for either proposal, the special committee should do what is necessary to put each proposal on an equal footing.

First, it should ask Icahn and Southeastern to agree that, like Mr. Dell in connection with his proposal, a majority of shares voted and not controlled by them will be required to elect their director nominees (which election is effectively is a plebiscite for their recapitalization proposal). If Icahn and Southeastern are willing to agree to such a voting agreement, then the committee can adopt the Dell/ Silver Lake recently proposed voting standard requiring the favorable vote of a majority of the shares voted and not controlled by Mr. Dell for approval of the Dell/Silver Lake deal. In this situation each proponent would have to persuade holders of a majority of shares voted and not affiliated with the proponent in order to implement its proposal.

But if Mr. Icahn and Southeastern refuse such a proposal (i.e. insist their votes count in the election of directors), the committee should take the bold step of modifying the vote requirement in the Dell/Silver Lake deal to merely require the vote of a majority of the outstanding shares, so Mr. Dell’s shares are counted equally with all other shares.

Allowing Mr. Dell’s shares to be counted in the vote on his own deal doesn’t seem unfair in this circumstance—particularly if it were done in exchange for allowing a simultaneous Icahn/Southeastern an up or down vote. Icahn and Southeastern get to vote on their proposal, so why not let Mr. Dell vote on his? The advantage Mr. Dell gains by this is offset by the ability of Icahn and Southeastern to propose a tangible alternative in a timely fashion.

Dell would be best off finding a way of breaking this logjam. Otherwise it could easily squander more time in connection with damaging and extended fights. Tweaking the voting rules as proposed Wednesday by Mr. Dell and Silver Lake will be controversial since it clearly favors Mr. Dell for a relatively insignificant price increase. Instead, why not let the shareholders decide Dell’s fate on a one share, one vote basis at a single meeting?


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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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