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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:

More details emerge of Dell buyout strategies supporting higher intrinsic value


Source: USA Today, June 9, 2014 article

Michael Dell beat Icahn, now he's reinventing PC stalwart


Michael Dell at the fifth annual Dell Women's Entrepreneur Network meeting in Austin. (Photo: Jack Plunkett, AP for Dell)


AUSTIN – Michael Dell was in a jocular, feisty mood – and who could blame him?

It had been several months since he'd wrested control of the company he founded 30 years ago in his college dorm from a ferocious corporate raider. And the buoyant Dell just received word his iconic company was expecting its sixth straight quarter of growth in PC market share.

"I won. It's over," the normally low-key Dell said in a rare, extensive interview here last week. "I feel liberated and unleashed. There is an infectious feeling with winning."

As victories go, this one was historic and gut wrenching. Dell took his company private in a $25 billion deal last October after a bruising, year-long battle with activist investor Carl Icahn. The showdown was essential to the survival of the company, Dell insists, after it embarked on a shape-shifting mission to diversify into data centers, cloud computing, servers, software, services, security and system management.

The PC laid the foundation for all of it, Dell said.

Now comes the hard part, some analysts suggest: reinventing a company that made its name — and fortune — selling personal computers in a world increasingly beholden to smartphones and tablets.

It is a challenge Dell relishes after feeling handcuffed by the expectations from the market for a public company undergoing a significant makeover. "The market encourages (public companies) to not make investments in new areas," he says, wincing at the notion. "It is short-term focused."

Dell reflected on his company, the PC industry and all things tech in a 45-minute interview from a conference room backstage at Austin City Limits, the legendary TV music program. Shortly afterward, he and wife Susan appeared onstage for the first time together to discuss their philanthropic foundation, which is separate from Dell the company.

Dell can look back on the multibillion-dollar showdown with Icahn and chuckle – sort of. "I can do whatever I want," he says, laughing. "I'm the boss." (Icahn did not return phone and e-mail messages Monday.)

The post-privatization plan

It's been five years since Dell audaciously pursued an enterprise strategy. It acquired executives – such as Computer Associates CEO John Swainson and Marius Haas, a former Hewlett Packard exec – and it snapped up more than two dozen companies, including Wyse Technology and SonicWALL. It also stepped up investments in research and development, through its Dell Research Division and Dell Ventures.

The Round Rock, Texas-based Dell also intends to capitalize on the ubiquitous Internet of Things, sensor-enabled devices and wearable devices that are expected to number in the tens of billions within a few years. "It's an exciting opportunity," says Dell, 49. "Anything that creates more nodes and data means potentially selling more servers, storage and networking gear."

But the company is drawing the line at building its own line of wearable devices, he says.

"The world got enamored with smartphones and tablets," Dell says. "But what's interesting is those devices don't do everything that needs to be done. Three-D printing, virtual-reality computing, robotics are all controlled by PCs. Productivity is grounded in the PC."

"Where does the computing power come from?" Dell says, leaning forward. "How would you run USA TODAY without PCs? Run a hospital without PCs?"

"People don't want products, they want solutions," Dell says.

Since completing its deal to go private, Dell has signed partnerships with Dropbox, Microsoft and Google to work on cloud computing. In December, it announced it was creating a $300 million venture capital fund. (On May 29, Dell CFO Tom Sweet said the company paid down $1 billion of its leveraged debt since going private.)

A private Dell allows it to move at its own speed to transform to an end-to-end technology solutions company without quarterly pressures from Wall Street and comparisons to rivals HP, Lenovo and Microsoft, says IDC analyst Matthew Eastwood, who closely follows Dell.

The rub, however, is selling the company's broader product lineup and services to longtime customers weaned on Dell PCs and servers, Eastwood says.

"That takes both deeper and different relationships with customers," he says. "Many of Dell's sales professionals will not be able to effectively make this transition."

The new Dell also "needs to work much harder to get its message out and change customer perceptions regarding its capabilities as an enterprise-solutions provider," Eastwood says. "This will take additional advertising and marketing effort at the corporate level."

Michael and Susan Dell address the fifth annual Dell Women's Entrepreneur Network meeting June 2 in Austin. (Photo: Jack Plunkett, AP Images for Dell)

The shift won't be easy. While PC revenue shrinks, Dell's enterprise-computing business has struggled to gain ground after spending $13 billion on 20 acquisitions since 2009. Competition in the field is vicious, with rivals including Cisco Systems, HP and IBM.

Haas says he's trying to transform Dell into a partner that businesses can count on for every technical aspect of a project – not just a supplier to customers' procurement departments. "Enterprise-class clients are realizing Dell is a formidable player," says Haas, who points out Dell is first in server market share in Asia Pacific and America and No. 2 in Europe. "In the past, we were not in consideration."

Analyst Patrick Moorhead, an Austin resident who speaks frequently to Michael Dell, is more blunt. Five years ago, Dell was "nowhere with storage, networking and software services," he says. "Through that lens, today it has achieved a lot."

A history of ups, downs

In the mid-1980s, Dell grasped the potential for selling PCs directly to consumers when most personal computers were sold via distributors and retailers. Though others like Gateway and Zeos quickly followed, they eventually faded away. By 1992, Dell – then 27 – earned the distinction as the youngest CEO of a Fortune 500 company.

"Thirty years ago, I made a decision to leave school and pursue my dream. I didn't know the impact we'd have on the world," the Dell founder wrote in a letter to employees in May. "We innovated a better way to make, sell and support technology – and the rest, as they say, is history."

For now, the ending appears happy. "What I saw at Dell's analysts' meeting (in May) was a relaxed, confident Michael Dell," Moorhead says. "He is no longer under the thumb of Wall Street. He can make moves at his pace."

When Dell had enough shareholder votes to fend off Icahn in mid-September, the company held a celebration.

Hordes of employees lined up early to attend. And when Dell took the stage to address the troops, he was showered with a 10-minute standing ovation, moving him to tears, says Karen Quintos, Dell's chief marketing officer.

"It was my most memorable moment (in 14 years) here," Quintos says, choking up at the memory. "It was profound moment, a realization of how iconic this company is and where it is headed. Not many companies have chances" for a second act.

"We got our swagger back," Chief Information Officer Adriana Karaboutis says.



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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