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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.



UPDATE NOTE: Shortly after the report below was distributed, the filing of a Court Order approving the settlement between Dell and the former T. Rowe Price petitioners was made available, presenting the Court’s explanations of the legal considerations for such approvals and the interests of other claimants that were considered:

The update report presenting this Order to Forum participants suggested that consideration of claimant interests could therefore be limited to what may be relevant to their review of the remaining open issue concerning Lead Counsel’s fee application for their allocations of costs.


For a printable copy of this report, click here.

Forum Report: Dell Appraisal Rights


Reported Dell Settlement with Former Appraisal Petitioners

Speculation about what is being settled

Practical considerations for eligible appraisal claimants

In a court filing yesterday for the Dell appraisal case, it was reported that the court had conducted a telephone conference Monday morning with Stuart M. Grant of Grant & Eisenhofer, the Lead Counsel representing appraisal claimants, and two attorneys representing Dell for a “Hearing Regarding Proposed Settlement.”[1] Counsel representing the other petitioners were not informed of the conference and did not participate.

Asked yesterday about the conference, Mr. Grant responded that it concerned only “those who were denied entitlement to appraisal” and declined to provide any more information.[2]

Adding to the mystery, Dell sent a letter to the Court this morning with notice to counsel for each of the eligible petitioners asking for formal approval of a Dell settlement with all of the former petitioners, presenting a form of a proposed order but not providing any indication at all of the terms of settlement.[3]

Also this morning, at about the same time as the Dell filing and presumably before seeing it, counsel for the Magnetar petitioners sent another of its letters to the Court, arguing that the secret settlement and conference supported Magnetar’s previously asserted views that Lead Counsel has conflicting interests and that Magnetar should therefore be given control of the final phases of the case.[4]

Finally – at least at the time of this report’s drafting – Grant & Eisenhofer filed its opposition to Magnetar’s demands for discovery relating to G&E’s fee application as Lead Counsel, in which they mention “a settlement in return for a substantially reduced interest payment.[5] This response does not indicate whether G&E’s representation of T Rowe Price in the settlement may require any change in the previous discovery responses of either G&E or T Rowe Price stating that Lead Counsel will be receiving no payments from T Rowe Price.

Speculation about what is being settled

The reports of a secret settlement have naturally stimulated speculation, not only about its provisions but also about more basic questions. While investors awaiting payments for their Dell appraisal right may not have any reason to concern themselves with what Dell wants to pay former petitioners, the fact that these questions exist justifies our attention:

Ø  Why would Dell offer the former petitioners anything to discourage their appeal of the court’s decisions? The decision relating to the voting issues (approximately 30 million of the ineligible shares, compared with fewer than 1 million shares made ineligible by ownership errors) has been virtually unquestioned by legal experts, and any appeal of it is assumed to have a very low probability of success. The most likely result of an appeal, under the circumstances, would be to give Dell several more months of interest-free use of T Rowe Price funds.

Ø  Why would Dell think T Rowe Price might risk losing another year of earnings on more than $400 million of their investors’ assets? For the same reasons that Dell might welcome an appeal, T Rowe Price would be expected to avoid both the continuing public attention to their errors and the financial exposure to more costs of “doing the right thing.”[6]

Ø  What is there, in fact, to negotiate? There is some controversy among lawyers about whether rights to appeal a determination that a stockholder is not entitled to appraisal rights would run for 30 days after a final order on the case, which has not yet been entered, or 30 days from the date of the Court’s May 11, 2016 Opinion entering a judgment that the T Rowe Price petitioners were not eligible.[7] Without guessing which of these legal positions might be right, observers have noted that the fact that such ambiguity exists suggests that someone concerned with preserving rights to appeal would normally file a notice to avoid risk – or at least support a viable negotiating position.

Ø  Why is the Court being asked to approve the settlement? If the T Rowe Price parties are no longer petitioners, it is not clear why either they or Dell would want approval, or why the Court would have any need to consider the settlement. Alternatively, if they are still considered petitioners pending the final order in the case, it is assumed that they would need to make all the disclosures required for review of a proposed settlement with a petitioner in an appraisal case, but they clearly do not contemplate this.

While it probably is not needed, I will of course welcome suggestions of additional questions, and your speculations about possible explanations.

Practical considerations for eligible appraisal claimants

It is very likely that whatever Dell and T Rowe Price have negotiated will not have any influence on the amount Dell will be required to pay the former stockholders who are eligible for appraisal rights. However, this needs to be an informed determination.

Under these circumstances, all eligible claimants should be able to consider the following information:

1.      A copy of any settlement agreement and related information – If the court must approve this agreement, it must be relevant to the interests of the eligible claimants, and you should therefore be able to determine whether you have any views to present for consideration.

2.      Disclosure of all payment arrangements between T Rowe Price and Grant & Eisenhofer – Whether stated to be related to the appraisal case or not, you will want to know whether any previously unreported payment might influence their representation of your interests or justify reductions of the payments the firm is seeking from you and other non-client claimants.

It should be noted that I have continued to advise Cavan, the Forum’s representative petitioner, that it is not in the interests of most eligible Dell appraisal claimants to support the Magnetar motion for their appointment as Co-Lead Petitioner. I do, however, believe that some of their discovery demands merit support, and also that we should remain open to considering support of requests for the Court’s modification of its Lead Counsel appointment if Grant & Eisenhofer is unwilling to perform its duties to all claimants according to the Court’s Consolidation Order.

The interests of eligible claimants are in fact very simple now. A final court order is needed for Dell’s payment of what’s due, and the only substantive open issue is the amount to be allocated for legal services and deducted from your payment. This should not require more than a few days from the time information is made available.

GL – June 29, 2016

Gary Lutin

Chairman, The Shareholder Forum

575 Madison Avenue, New York, New York 10022

Tel: 212-605-0335



[2] A copy of the email exchanges, which were explicitly not confidential, can be provided upon request.

      [These records were subsequently posted; see June 28, 2016 email exchanges with Stuart Grant as Lead Counsel.]

[7]  The Conclusion of the Opinion states that the former T Rowe Price petitioners “do not possess appraisal rights, and judgment is entered against them.” See May 11, 2016, In Re: Appraisal of Dell, Inc. (Consol. C. A. No. 9322-VCL): Opinion Enforcing Dissenter Requirement (70 pages, 625 KB, in PDF format).



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.