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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 reference:

Reactions to court determination that Dell's fair value exceeded its fair price


For the court's careful explanations of the distinction between fairly negotiated pricing and the intrinsic fair value of a company, and of the court's appraisal of that fair value, see

For other news reports of the court's decision in the closely watched appraisal case initiated October 29, 2013, by the Forum's representative petitioner, Cavan Partners, LP. and supported by its attorneys' research of court valuation standards, see the "Appraisal of Fair Value" section of the Dell project's reference page.


Source: Austin Business Journal, May 31, 2016 article



Court: Dell shares were undervalued by 28% in 2013 buyout

May 31, 2016, 10:28am CDT



Christopher Calnan

Staff Writer

Austin Business Journal


A Delaware court has ruled that Dell Inc. shares were worth nearly $4 more than what shareholders received in the 2013 buyout.

The court of chancery in the state of Delaware — widely recognized as the nation's best forum for the determination of internal business disputes — determined the value of Dell shares was $17.62 compared with the $13.75 paid by an investor group led by CEO Michael Dell. That's a difference of 28 percent.

A Delaware court has ruled that Dell Inc. shares were worth nearly $4 more than what shareholders received in the 2013 buyout.

Sam Hodgson

Attorneys for the 100-plus minority shareholders objecting to the October 2013 buyout price had asked for $28.61 per share, according to a 115-page ruling issued by the court on Tuesday.

The decision was based on a four-day trial, 1,200 exhibits and 17 depositions. It's unclear whether Dell will appeal the ruling. Company spokesman David Frink declined to comment.

Most past Dell shareholders can't expect a windfall due to the recent decision. Only shareholders that sued over the buyout are eligible to receive the higher payout. The largest holder is hedge fund Magnetar Capital, which has rights to about 3.8 million shares and stands to collect about $15 million, according to the Wall Street Journal.

Gary Lutin — chairman of Shareholder Forum, a New York company that moderates disputes between shareholders and companies — said: "The court’s decision certainly shows the shareholders who demanded appraisal, as well as all the current investors and employees, that Mr. Dell was right about his company being worth a lot more than the stock market’s pricing."

Round Rock-based Dell, the No. 3 computer maker in the world, employs an estimated 13,000 workers in Central Texas. Its parent company is now poised to complete a $67 billion acquisition of Massachusetts-based EMC Corp. (NYSE: EMC) in what would be the largest technology merger in history.

The Michael Dell-led investor group paid $24.9 billion for Dell Inc. in the 2013 shareholder buyout.

In May, a Delaware chancery judge ruled that T. Rowe Price Associates Inc., an affiliate of T. Rowe Price Group Inc. (Nasdaq: TROW) that was once Dell’s third-largest shareholder, couldn’t be part of the share appraisal process because it voted in favor of the 2013 buyout — even though it was done unintentionally.

In late 2015, the Austin Business Journal reported that Dell agreed to pay the New York-based Blackstone Group LP (NYSE: BX) $25 million in due-diligence expenses as a prospective buyer for Dell in the run-up to the 2013 buyout.

Michael Dell has repeatedly cited the benefits of taking the company private and highlighted its increasing market share in the personal computer market.

However, Dell has also posted losses for the last three years. During fiscal 2016, it reported a loss of $1.1 billion on revenue of $54.8 billion compared with a loss of $1.2 billion on revenue of $58.1 billion during fiscal 2015, U.S. Securities and Exchange Commission filings show.

Christopher Calnan covers technology, finance and clean energy for the Austin Business Journal.

© 2016 American City Business Journals.


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.