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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.



NOTE: The article below reports two misperceptions that require clarification for readers who may be unfamiliar with Shareholder Forum provisions assuring investor independence, in its regular programs as well as in the Dell Valuation Trust:

  1. The report that "Icahn is expected to vie for lead plaintiff status against the Dell Valuation Trust" is inconsistent with both Delaware appraisal law and the publicly stated Trust plans. Legally, appraisals are not class action lawsuits with plaintiffs and defendants, but are instead proceedings conducted for any number of "petitioners" who are not required to establish a "lead." In any event, one of the key purposes of the Trust's organization plan and policies is to support each participant's fully independent control of investment decisions, and Icahn has the same right to participate as any other owner of appraisal rights.

  2. The description of the Shareholder Forum as an "affiliation of institutional investors" implies agreements that would violate the Forum's well established, publicly posted policies assuring the independence of all participants. As stated at the bottom of every page on the Forum's website with reference to "Conditions of Participation" that have been carefully evolved and thoroughly tested since 1999, each participating investor is expected to make independent decisions.


Source: Law360, September 18, 2013 article

Dell Vote Tally Hints At Big Appraisal

By Liz Hoffman


Law360, New York (September 18, 2013, 6:14 PM ET) -- The official tally from Dell Inc.'s $25 billion buyout vote is in, with two main takeaways: Resetting the record date is a remarkably effective way to cut out abstentions, and Dell's appraisal action may end up being one for the history books.

Excluding CEO Michael Dell's 15 percent stake, about 734 million shares, or 62.6 percent of all ballots cast, voted in favor of the deal. Another 400 million, about 34 percent, voted against. The remaining 39 million, or 3.3 percent, abstained.

The vote, held Sept. 12 at the company's headquarters in Round Rock, Texas, paves the way for Michael Dell and private equity firm Silver Lake Partners to take the teetering technology giant private for $13.88 per share.

All that remains now is to line up the $13.75 billion in bank and bond debt, the first pieces of which kicked off their road show this week.

Takeaway 1: Record Date Reset Works Wonders

At Dell's first merger meeting, in mid-July, nearly one quarter of shares weren't voted at all. The abstentions were likely a mix of apathy and "soft no" votes — a way for institutional shareholders to express displeasure with the deal without making enemies — and threatened to derail the deal, which required a majority of all of Dell's outstanding shares to vote in favor, rather than simply a majority of votes cast.

The buyers won a change to the voting rules to only count cast ballots. But even under the old rules, with abstentions counted as "no" votes, the buyout still would have succeeded. 

It was the decision to reset the record date — part of the last-minute changes that also included a 10-cent-per-share price bump and special dividend — that made the difference. Furious trading during June and early July meant that stockholders entitled to vote under the original June 3 record date weren't necessarily the same ones holding shares by September.

Changing the record date brought in latecomers who would be more likely to care one way or the other about the outcome. 

And it got the stamp of approval from Delaware Chancellor Leo E. Strine Jr., who ruled last month that boards can take extraordinary measures, including resetting record dates, in support of a deal they think is in shareholders' best interests. The decision, which effectively killed organized opposition from dissident investors Carl Icahn and Southeastern Asset Management Inc., drew on years of Delaware precedent that has given boards a lot of latitude in the trenches of contested M&A battles.

Takeaway 2: Sizable Appraisal Pool

In buyouts, disgruntled stockholders who want a judge to decide how much their shares are worth must do two things: vote against the deal and send a letter to the company declaring their intention to seek appraisal.

Although Dell has not yet said how many demand letters it has received, and a spokesman declined to comment Wednesday, the final tally shows that more than one-third of shareholders voted no, which makes them theoretically eligible.

The Dell appraisal is likely to be the largest ever, and certainly one of the highest-profile. Assuming Icahn and Southeastern voted their roughly 225 million combined shares against the transaction, that leaves 175 million other shares held by investors who think they can do better in court.

That effort will kick off later this fall, once the statutory 120-day window after the vote has closed. Icahn is expected to vie for lead plaintiff status against the Dell Valuation Trust, a novel effort to make appraisal rights liquid and tradable. The trust is organized by The Shareholders Forum, a loose affiliation of institutional investors, headed by former investment banker Gary Lutin and advised by Fish & Richardson PC and Bingham McCutchen LLP.

Dell's special committee is represented by Debevoise & Plimpton LLP partners Jeffrey Rosen, William Regner and Michael Diz, and attorneys from Morris Nichols Arsht & Tunnell LLP. JPMorgan Chase & Co. and Evercore Partners Inc. are providing financial advice.

Michael Dell is represented by Martin Lipton and Steven A. Rosenblum of Wachtell Lipton Rosen & Katz. Silver Lake is represented by Rich Capelouto and Chad Skinner of Simpson Thacher & Bartlett LLP.

Icahn is represented by in-house counsel. Southeastern is represented by Dennis J. Block of Greenberg Traurig LLP.

--Editing by Jeremy Barker. 


© Copyright 2013, Portfolio Media, Inc.


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.

Inquiries about this project and requests to be included in its distribution list may be addressed to

The information provided to Forum participants is intended for their private reference, and permission has not been granted for the republishing of any copyrighted material. The material presented on this web site is the responsibility of Gary Lutin, as chairman of the Shareholder Forum.

Shareholder Forum™ is a trademark owned by The Shareholder Forum, Inc., for the programs conducted since 1999 to support investor access to decision-making information. It should be noted that we have no responsibility for the services that Broadridge Financial Solutions, Inc., introduced for review in the Forum's 2010 "E-Meetings" program and has since been offering with the “Shareholder Forum” name, and we have asked Broadridge to use a different name that does not suggest our support or endorsement.