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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.


Referenced in Forum distribution:

Required Dell filing in Forum's Valuation Trust appraisal case identifies investors reserving rights


The article below refers to a "Verified List" of all stockholders demanding appraisal rights that Dell Inc. filed as required by Section 262(f) of the Delaware General Corporation Law in the case of Cavan Partners, LP, a Dell Valuation Trust participant, v. Dell Inc., C.A. No. 9046-CS. A copy of the filing will be provided to Forum participants upon request.

For a similar article that was distributed to Forum participants, see

Note: Participants in the Forum-supported Dell Valuation Trust do not need to take the additional actions reported in the article below to secure their appraisal rights. (See the October 8, 2013 Forum Report: Provisions for Dell Valuation Trust Support of Marketable Appraisal Rights.)


Source: The Wall Street Journal, November 27, 2013 article


Dell Investors Line Up For Court Appraisal

T. Rowe, Magnetar Among Those Reserving Right To Seek Appraisal In Dell Buyout


By Liz Hoffman

Nov. 27, 2013 5:02 p.m. ET

Investors with claims on more than 47.5 million Dell Inc. shares have reserved the right to ask a judge to award them more than the buyout price, in the latest example of investors trying to use the courts to nab a better outcome in a deal.

The investors, named in a filing by Dell this week in Delaware court, in September voted against the company's sale to Michael Dell and private-equity firm Silver Lake Partners, and sent a letter to the company preserving their right to seek so-called appraisal of their shares. Most have not yet actually done so.

They have until about the end of the year to change their mind and take the cash offered in the deal. Or, if they don't, they have another two months after that to bring an appraisal claim in court.

Appraisal is a legal process that lets shareholders who voted against a cash-out deal ask a judge to determine the fair value of their stock. It has recently become a more popular strategy for hedge funds and other investors willing to wager they can get more in court. Downsides of the strategy include the risk of getting less from a judge and the time waiting for the court to decide.

The largest holder on the list is T. Rowe Price Group Inc., which currently holds more than 30 million shares across its own funds and about a million more on behalf of clients, according to the court filing.

Other large investors angling for appraisal include the New York state Common Retirement Fund, with 4.3 million shares, and affiliates of John Hancock Life Insurance Co. and hedge fund Magnetar Capital LLC, with about 3.8 million each, the filing said.

Dell has challenged the validity of potential appraisal claims for more than 6.2 million of the shares, mostly claiming that the investor in question didn't satisfy a requirement to hold the stock continuously in the weeks leading up to the deal's closing. A spokesman for Dell declined to comment beyond the filing.

Dell's $25 billion buyout narrowly survived a shareholder insurgency rallied by Carl Icahn and Southeastern Asset Management Inc. Mr. Icahn urged shareholders to seek appraisal but said last month that he would take the deal cash instead.

Southeastern sold about half its approximately 8% stake to Mr. Icahn in June at a discount to the then $13.65-per-share offer price. Southeastern doesn't appear on the court-filed list of investors, suggesting it sold the remainder of its stake into the deal. A representative wasn't immediately reached for comment.

Mr. Dell and Silver Lake closed their acquisition of the technology company Oct. 30, hoping to continue in private its shift from a PC maker to a provider of corporate software and services.

T. Rowe Price, Magnetar and the other Dell investors are the latest to see potential upside in appraisals. Hedge-fund firms like Merion Investment Management LP, Hudson Bay Capital Management LP and Merlin Partners LP are testing their luck challenging recent deals including KKR & Co.'s acquisition of Gardner Denver Inc., BMC Software Corp.'s private-equity buyout, and Dole Food Co.'s sale to its founder.

Write to Liz Hoffman at

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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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