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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:

T Rowe Price demonstrates responsibility to investors by assuming costs of procedural that lost its rights to Dell appraisal


For the court decisions that the discovery of T. Rowe Price's voting errors made the shares held in its managed accounts ineligible for appraisal, and denying their motion for an "equitable" award of interest accruals, see

Additional court records and reports addressing both the voting and ownership errors can be found in the "Entitlement to Appraisal Rights" section of the Dell project's reference page.


Source: Investment News, June 6, 2016 article

T. Rowe Price to pay out $194 million to shareholders in four mutual funds, other clients

Firm's moves stems from error it made in voting on the 2013 buyout of Dell

Jun 6, 2016 @ 4:07 pm

By John Waggoner


T. Rowe Price said Monday it would pay about $194 million to fund shareholders and other clients for an error it made in voting on the 2013 buyout of Dell.

The shareholders held about 31 million Dell shares at the time.

At the time of the buyout, T. Rowe Price thought that the $13.75 share price offered by Michael Dell and others undervalued the company. “Several T. Rowe Price funds, trusts, and clients subsequently filed a petition with the Delaware Court of Chancery to seek a fair value appraisal for their Dell shares,” the company said in a press release. The court ruled that Dell's fair value was $17.62 per share.

Unfortunately, T. Rowe inadvertently voted for the merger, rather than against. The court ruled last week that the vote made T. Rowe's shares ineligible to pursue the higher share value. While this validated T. Rowe's thinking on the shares, it was cold comfort to shareholders.

“As a result, T. Rowe Price expects to record a one-time charge of approximately $194 million in its second quarter of 2016, which is expected to reduce net income, after tax, by about $118 million—or approximately $0.46 in diluted earnings per share of common stock,” the Baltimore-based investment firm says. The company will fund the payments from available cash.

Some T. Rowe Price fund shareholders will see a boost on the next-computed share value of their funds. They are:

- Equity Income: 14 cents a share, or 0.45% of the net asset value

- Science and Technology: 42 cents a share, or 1.20% of NAV

- Institutional Large-Cap Value: 4 cents a share, or 0.21% of NAV

- Equity Income Portfolio: 15 cents a share, or 0.53% of NAV.

“Since this situation began, our focus has been on securing fair value from the Dell buyout for our clients,” T. Rowe Price president and CEO William Stromberg said in a statement. “The court's determination that the original buyout consideration offered by Dell was too low validated our original investment view. By compensating our clients based on the court's May 31, 2016, ruling, clients will come out ahead as compared with how they would have fared had they taken the merger consideration.”


Copyright © 2016 Crain Communications Inc.




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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