Forum Home Page see Broadridge note below]

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.



Source: Law360, October 4, 2013 article

Icahn Drops Dell Appraisal Fight, Will Take Deal Cash

By Liz Hoffman


Law360, New York (October 04, 2013, 12:37 PM ET) -- Carl Icahn on Friday laid down the last of his arms in his fight against Dell Inc.'s $25 billion buyout, dropping his demand for appraisal on more than 150 million shares and agreeing to take the $13.75-per-share merger price.

The billionaire investor broke the news on his new favorite outlet, Twitter, and later followed up with a regulatory filing.

"I withdrew my demand for appraisal of my Dell shares," Icahn — who has used his Twitter handle, @Carl_C_Icahn, to disclose market-moving news in recent weeks — said in a Twitter post. "Based on our returns on capital, we believe we have better uses for $2 billion."

The transaction, which will give CEO and founder Michael Dell and buyout firm Silver Lake Partners a chance to turn around the struggling technology company in private, is on track to close before the end of the month, which is the end of Dell's fiscal quarter. Shareholders approved the buyout last month after Delaware Chancellor Leo E. Strine Jr. upheld the board's last-minute tweaks to the voting rules and record date, all but ensuring the deal's passage.

Icahn's course reversal is surprising. The investor, who bought into Texas-based Dell's stock after the deal was announced and teamed for a while with disgruntled long-term shareholder Southeastern Asset Management Inc., had vowed a long fight. Even after he withdrew his effort to thwart the deal by running a slate of directors, he urged shareholders to pursue their appraisal rights.

And the main drawbacks to appraisal actions — concerns about liquidity, public reporting and valuation requirements, and patience — seemed small obstacles for Icahn, whose net worth is in the billions and whose campaign against Michael Dell has at times veered into the personal.

Now, the appraisal banner will be carried by the Dell Valuation Trust, a
novel effort to essentially create a new, tradable asset class out of appraisal rights. The trust is spearheaded by the Shareholder Forum, an effort to educate investors about their rights, and run by Gary Lutin, a former investment banker turned corporate governance watchdog.

One plan is for Dell investors who think their shares are worth more to pool their rights into the trust.  those who want out for any reason could sell their trust units, while arbitrageurs or other, more patient investors could buy in. Lutin said the trust will also manage options for investors who don't want the publicity of a traded security, though the details are still being worked out.

To establish enough marketability for the public-float option, Lutin says the trust needs about 20 milion shares. It has lost out on Icahn's 156 million, but likely has a big pool of shares to draw from. Some 400 million shares were voted against the merger, a prerequisite for demanding appraisal. It's not clear how many of those shares have sent a letter to Dell declaring their intentions — spokesman David Frink has repeatedly declined to comment — but even half would leave more than twice the number the trust is seeking.

Appraisal actions can't officially be filed until early March, after the 120-day statutory window from the merger's effective date expires. And they are notoriously unpredictable; the judge could very well decide Dell, whose earnings have slipped steadily since the deal was announced, is worth less than the $13.75-per-share merger price. 

But Lutin's group likes their odds; a
recent report commissioned by the forum found that in only eight Delaware appraisal cases in the past 20 years has a judge awarded less than the merger price. 

The Dell Valuation Trust is represented by Bingham McCutchen LLP on SEC regulatory issues and by Fish & Richardson PC on appraisal matters.

--Editing by Katherine Rautenberg.


© 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.