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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.



For the letter Dell filed with the SEC, reported in the article below, and for the letters it addressed (which Dell did not include in its SEC filing), see


Source: Law360, March 15, 2013 article

Dell Snubs Request For Records Related To $24B Buyout

By Liz Hoffman


Law360, New York (March 15, 2013, 8:16 PM ET) -- Dell Inc. on Friday refused a shareholder rights group's request to view information related to its $24.4 billion buyout, claiming the group “in effect seeks access to the boardroom” and falls short of Delaware's standard for books-and-records requests.

In a letter filed with the U.S. Securities and Exchange Commission, Dell said it will not give the Shareholder Forum its correspondence with the three investment banks advising on the deal. The company also won't release its communications with billionaire investor Carl Icahn, whom it allowed this week to sign a confidentiality agreement and view certain information.

Delaware law allows stockholders to demand to see a company's books and records, and allows it to tap an attorney or other agent to execute such a request. In this case, the Shareholders Forum says it is acting on behalf of a fund manager, and has so far submitted two requests to inspect Dell's books and records.

But Dell says the request is a fishing expedition designed to root out information and share it broadly with the company's investors.

“It is obvious from the face of both demands that neither was submitted 'on behalf of' Cavan Partners LP, a purported [Dell] stockholder, and that they were at most submitted with Cavan’s authorization, but for purposes related to the business interests of the Shareholder Forum,” Dell said in the letter, which is signed by counsel Janet Wright and copied to lawyers at Debevoise & Plimpton LLP, Morris Nichols Arsht & Tunnell LLP and Richards Layton & Finger PA.

The Shareholder Forum has been lobbying for an independent valuation of Dell specifically for its shareholders — essentially, a fairness opinion for investors. To do that, it needs the same information the company provided to the investment banks advising on the transaction.

On March 5, the Shareholder Forum asked for all communications with JPMorgan Chase & Co., Evercore Partners Inc. and Goldman Sachs & Co. dating back to August. On March 11, the group amended its request to include all information Icahn had received, as well as all records of Dell's communications with the billionaire. The group has promised to keep confidential information private.

“If the people proposing a transaction have information that sellers can’t see, you’re not going to have a viable marketplace,” Gary Lutin, director of the Shareholder Project, told Law360. “It’s a matter of common sense, and plain fairness.”

Dell says that's what the proxy statement is for. And it has repeatedly said its four-member special committee is looking out for shareholders.

But crafting the best deal for investors is separate from helping them decide how to vote, Lutin said.

“That's not [the special committee's] job,” Lutin said. “They can’t be expected to know what each investor should do, and I don’t think any director really wants to assume responsibility for making recommendations to Investor A with three kids about to go to college, or to some public pension fund with an indexed portfolio. Every shareholder obviously needs to make its own decision, and that requires fair access to the relevant information.”

Dell claims that much of the information is confidential and that the group's scope is overly broad. It said Friday that stockholders “are entitled to information that is material to the stockholders’ voting decision”— no more, no less.

And it trotted out a string of Delaware cases to support its point. Among them is a 2007 decision in a battle between Bill Ackman's Pershing Square Capital Management LP and Ceridian Corp. Then-Chancellor William Chandler ruled that Pershing Square's pursuit of letters between Ceridian executives didn't meet the standard for Delaware records requests.

In a 2006 case, the court denied a hedge fund's request to view West Corp.'s books and records in order to evaluate the fairness of a $4.1 billion offer price. Another 2007 decision, Fairthorne Maintenance Corp. v. Ramunno, requires investors to tailor their requests to “only to seek documents proportionate” to their specific needs, Dell said.

The pushback comes as opposition to Dell's leveraged buyout continues to mount. The deal will see the company acquired by its founder and largest shareholder, Michael Dell, and private equity firm Silver Lake Partners for about $5.7 billion in equity, up to $15 billion in debt, and the remainder in company cash.

Since the deal was announced last month, investors holding about 19 percent of the company's stock — likely higher, depending on the size of Icahn's stake — said they will vote against the deal. Some are pushing for a higher price, a special dividend or a chance for current investors to benefit from future growth.

Dell is represented in the merger by Hogan Lovells, with Goldman Sachs & Co. acting as financial adviser. Its special committee is represented by Debevoise & Plimpton, and is receiving financial advice from JPMorgan, advised by Davis Polk & Wardwell LLP, and Evercore, advised by Weil Gotshal & Manges LLP.

Michael Dell is represented by Wachtell Lipton Rosen & Katz. Silver Lake is represented by Simpson Thacher & Bartlett LLP.

Microsoft Corp., which is providing a $2 billion bridge loan to help finance the deal, is represented by Sullivan & Cromwell LLP.

--Editing by John Quinn.


© Copyright 2013, Portfolio Media, 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.

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.