Dell Takes Aim At Muddled Vote In Shareholder
By Peter Hall
Law360, Wilmington (August 7,
2015, 9:36 PM ET) --
Dell Inc. urged the Delaware Chancery to throw out petitions seeking
appraisal of its stock, saying it's now clear that although several of its
largest investors publicly opposed the computer maker's $25 billion
go-private deal, they’re barred from seeking an adjustment because their
stockholder of record voted in its favor.
In a brief supporting its summary judgment motion made public Thursday,
Dell says discovery has revealed that although
T. Rowe Price Associates Inc. directed its funds to vote their shares
against the 2013 merger, an intermediary's proxy system contained
As a result, the funds' record stockholder, Cede & Co., through a chain of
proxies, actually voted the shares in favor of Dell founder Michael Dell's
buyout, the company says in the heavily redacted brief, which was first
filed under seal July 30.
Although 13 mutual funds involved in the transaction reported the vote as
required by federal securities regulations, T. Rowe Price did not discover
the voting issue for more than a year after the fact, Dell's brief says.
Dell says it has learned through discovery and interrogatories that in
late 2014, T. Rowe Price and proxy advisory firm
Institutional Shareholder Services conducted an investigation that
revealed within a few days the T. Rowe funds' shares had been voted for
“These facts make clear that the subject petitioners' assertion that it is
'not possible to know how the record holder actually voted the specific
shares attributed to any specific individual beneficial owners of Dell
shares,' is incorrect,” the Dell brief says.
If Dell succeeds in having T. Rowe Price’s appraisal demand tossed over
the issue, it would eliminate one of the largest shareholders challenging
the price of the deal, which is set to go before the Chancery Court for a
fact trial in October.
Dell argues the fact that the record holder of the funds' shares voted in
favor of the buyout deal disqualifies them from seeking an appraisal under
“A dissenting stockholder's failure to comply strictly with the technical
requirements of the appraisal statute — such as the requirement that the
stockholder not vote in favor of the transaction — are not excusable,
irrespective of the equities,” Dell argues.
The brief also argues that the petitioners cannot rely as a remedy on
votes against the merger cast by the same intermediary,
Broadridge Financial Solutions, on behalf of other clients. Dell notes
the Delaware Supreme Court has rejected the notion that shares held by a
single broker on behalf of multiple clients are fungible.
And Dell argues that the petitioners cannot claim the inadvertent votes
were the result of Dell's proxy language or negligence on the part of ISS.
The appraisal action was first lodged in October 2013 by Cavan Partners —
which held 100 shares, according to court records — and the case was
eventually consolidated with dozens of other shareholders claims.
A majority of Dell shareholders approved the buyout a month earlier, after
then-Chancellor Leo E. Strine Jr. upheld last-minute tweaks by Dell's
board to voting rules and record date, dousing a stiff and well-publicized
T. Rowe Price counsel Stuart M. Grant declined to comment on the filing
The asset managers are represented by Stuart M. Grant, Michael J. Barry,
Christine M. Mackintosh, Jennifer A. Williams and Rebecca A. Musarra of
Grant & Eisenhofer PA.
Dell is represented by Gregory P. Williams, John D. Hendershot, Susan M.
Hannigan and Andrew J. Peach of
Richards Layton & Finger PA and John L. Latham, Susan E. Hurd, Gidon
M. Caine and Charles W. Cox of
Alston & Bird LLP.
The case is In re: Appraisal of Dell Inc., case number 9322, in the Court
of Chancery of the State of Delaware.
--Editing by Kelly Duncan.
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