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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 a later report of the agreement anticipated in the article below, see


Source: The Wall Street Journal, August 2, 2013 article


TECHNOLOGY  |  Updated August 2, 2013, 8:14 a.m. ET

Dell Deal Close but Not Final

Agreement With Founder, Silver Lake Would Amend Voting Rules




Michael Dell and Silver Lake are nearing a new deal with Dell Inc.'s special board committee that would increase the price they would pay for the computer maker in exchange for a modification to the voting rules expected to ease passage of the deal, according to people familiar with the discussions.

The per-share price would be $13.75, up from an earlier $13.65, and the deal would also include a special dividend for shareholders, the people said. The special dividend would be 13 cents a share for investors, and there would be a guarantee that the regular, quarterly eight-cent dividend would be paid for the third quarter, one person said.

The third-quarter dividend wouldn't have been paid if the deal closed before late October; however, a close would likely be later at this point, which had raised a question whether the dividend would be paid.

In total, the new price bump and one-time dividend would deliver at least $350 million more to stockholders not affiliated with Mr. Dell, the person added. Adding the third-quarter dividend would bring that figure to $470 million, the person said.

The new deal isn't done yet, the people cautioned.

Any new pact would delay the process for a vote by Dell shareholders likely by about another month. After two earlier delays, the vote had been set for Friday morning.

The voting-rule change would have only shares that are actually voted count, altering an earlier clause that had abstentions counting as "no" votes. That clause proved problematic when turnout for the vote wasn't as high as the buyout group and special committee had hoped; that led to the earlier vote delays.

The adjustment could be enough to get the deal to pass, advocates and detractors of the deal have said.

The change would likely prove controversial among some shareholders. Carl Icahn sued the company Thursday to stop any such voting change.

A special dividend could help both the special committee and the buyout group get around certain concerns.

It would put more money in the hands of shareholders, which would help the special committee argue that it has gotten the best deal it could have out of the buyout group. The buyout group would avoid putting up more equity for the deal, which matters in calculating their future returns. Instead, they would be sacrificing money from the company's cash pile that they had planned to have on hand for operations and for paying down the debt they are about to pile onto it.

Dell shares were up 3.7% to $13.44 in premarket trading.

Mr. Dell and Silver Lake are seeking to take private ownership of the Round Rock, Texas, computer maker he founded nearly 30 years ago and that has struggled to keep pace with the latest technology trends. Mr. Dell has envisioned focusing the company on serving corporate clients rather than selling consumer computers. Shareholders who have protested the deal have had many of the same goals but felt the original $13.65-a-share price undervalued the company and that the buyout unfairly cut them out of potential upside in any Dell revival.

The resistance to the original deal, struck Feb. 5, proved more than Mr. Dell could overcome, leading the company to repeatedly delay a shareholder vote until it could work out an arrangement that paved the way for the deal's success.

When more than 20% of shares weren't voted, the buyout faced a likely defeat, as another 22% of shareholders eligible to vote, including Mr. Icahn, have publicly said they were rejecting the deal.

Mr. Dell, the founder, chairman and chief executive of the company, and Silver Lake had earlier asked the special committee to change the rules governing abstentions in exchange for a 10-cent increase. The special committee countered with an offer to change the "record date" for the same increase, the date that determines which Dell stockholders could cast votes on the deal. The buyout group didn't think changing the record date alone would ensure the deal's passage, a person familiar with the buyout group said.

The newly revised deal also would push forward the record date, creating a new base of shareholders to vote on the accord.

A new pact would be the latest twist in the takeover drama, in which Mr. Dell's goal of taking the company out of the public eye has proven elusive, even as certain key developments have gone his way. In April, industry-research firm IDC issued a surprisingly bleak report on global PC shipments, potentially lending credence to the board's inclination to sell the company.

Later that month, private-equity giant Blackstone Group LP, which had considered an offer greater than $14.25 a share, backed away after getting spooked at Dell's business prospects during due-diligence research. That move, and the lack of any other bidders for the whole company, gave the committee and buyout group leverage to say no higher offer was in sight.

Then, in July, three shareholder-advisory firms urged shareholders to take the $13.65-a-share offer.

Still, all of these favorable factors weren't enough to overcome resistance posed by Southeastern Asset Management Inc. and its friend in the fight, Mr. Icahn, who together maintained the price was too cheap and the deal cut public investors out of any upside the company could achieve in the future under private ownership.

The investing pair have said if the buyout vote failed, they would put up their own slate of directors at Dell's annual meeting to try to oust the board, including Mr. Dell. They have proposed a plan in which the company would borrow money and pay shareholders $14 a share for as many as 1.1 billion shares.

They have urged Dell's board to call their proposal superior to Mr. Dell's and, short of that, to put both to a vote to give shareholders an option to choose one, the other or neither.

Write to David Benoit at and Sharon Terlep at


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.

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