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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.


Forum distribution:

Dell's buyer explains difference between short term market price of purchase and long term intrinsic value


Source: Channel Pro, October 23, 2013 article

Michael Dell: No longer constrained by short-term minded investors

News | | Oct 23, 2013



Michael Dell says as a private company Dell can be as aggressive as we want to be

Dell founder and CEO Michael Dell this morning outlined his vision for the future of the company now it is once again a family-owned company.

Speaking at the Dell Tech Camp in Paris, Dell described how taking the company back into private hands and no longer answering to shareholders enabled it to pursue its aspirations as a serious player in the enterprise.

The capital structure we have now is much more favourable than the one we had as a public company, he said. Theres greater flexibility and I feel fortunate to operate this as a private company with much longer term time horizon and the ability to be as aggressive as we want to be. We have all the capacity we need. We have two equity investors who will contribute additional capital as needed; we have plenty of capital to expand and make acquisitions.

He added: The last four or five years our business has shifted in a dramatic way. Weve built an entirely new business in the enterprise, the datacentre, software, services weve more than doubled the size of that business from $10bn $21bn. Now we want to double it again.

Dell explained how, crucially, the buyout will allow for increased investment in R&D. In the US theres an affliction of short term thinkingPublic companies are subjected to what can be characterised as a 89-day planning cycle where they constantly have to adjust their plans based on market expectations, he said. We care about three, five, 10 years from now.

[Were] accelerating the strategy we have around end-to-end solutions. Our R&D grew by 25 percent last quarter. We filed more patents this year than last year, which was a record. Were continuing to build our solutions in software, server, enterprise, the datacentre, vertical expertise were absolutely building for the long term.

The exec also couldnt resist taking a swipe at rivals HP and IBMs recent results: Our enterprise business grew nine percent last quarter. One of our two-letter competitors had a growth of negative nine percent; one of our three-letter competitors x86 business is down 18 percent so we believe were gaining share across the enterprise and the datacentre.

He adds: All of these things are things that as a public company are harder to dobecause of the demands of these short-term minded investors.

Copyright Dennis Publishing Limited.

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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