Forum Home Page see Broadridge note below]

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.



The report below followed an earlier article by the same author, "The Path to a Three-Way Race for Dell," published within minutes of Dell's filing with the SEC of a preliminary proxy statement (SEC EDGAR Filing Details: 2013-03-29 15:49:59), which news organizations had reportedly been told to expect even though Dell's special committee had not yet determined what to propose. For that statement and two related disclosures that were filed soon after (2013-03-29 16:24:32 and 2013-03-29 16:33:49), see


Source: New York Times DealBook, March 29, 2013 article

Mergers & Acquisitions | March 29, 2013, 4:20 pm

Timeline: How Michael Dell’s Takeover Bid Got Hatched


Shareholders may still be irate over the $13.65 a share that Michael S. Dell has bid for the company that bears his name.

But according to the company’s proxy filing on Friday, the price has come a long way from what Mr. Dell‘s partner, Silver Lake, first offered.

Here’s a chronology of Silver Lake’s bidding history, stretching well back to the early days of Dell’s deliberations about whether to go private.

They’re set against what the proxy describes as a series of missed financial projections and increasingly dire assessments by the Boston Consulting Group, which the committee had retained as an additional adviser.

June 15: Southeastern Asset Management, Dell’s biggest outside investor with what is now an 8.4 percent stake, reaches out to Mr. Dell with a novel idea: taking the company private. Southeastern had expressed interest in staying invested in the computer maker in any leveraged buyout and furnished Mr. Dell with a spreadsheet and other information.

July 17 to Aug. 14: Mr. Dell first meets with Silver Lake at an industry conference and begins discussing the idea of taking the company private. Mr. Dell also has conversations with an unnamed private equity firm, dubbed “Sponsor A” in the proxy filing, about a leveraged buyout. (That firm was Kohlberg Kravis Roberts, according to people briefed on the matter.)

Last month, DealBook noted that Mr. Dell had had discussions with top executives at both firms — Egon Durban of Silver Lake and George R. Roberts of K.K.R. — in Hawaii, where all three men have residences.

On Aug. 14, Mr. Dell formally notified Alex Mandl, the company’s lead independent director, that he was interested in taking the computer maker private. Six days later, the board formed a special committee, with Mr. Mandl as its head.

Months of deliberations within the Dell special committee began, as Silver Lake and K.K.R. began conducting due diligence.

Oct. 23: Both Silver Lake and K.K.R. submitted preliminary offers for the computer company. Silver Lake offered to pay $11.22 a share to $12.16 a share for all of Dell. Its bid envisioned Mr. Dell contributing his 16 percent stake in the company to the deal.

K.K.R. contemplated paying $12 a share to $13 a share. The firm assumed that both Mr. Dell and Southeastern Asset Management, Dell’s biggest outside investor with a roughly 8.4 percent stake, would join the offer. Mr. Dell was also expected to kick in an additional $500 million.

Nov. 2: Bankers at JPMorgan Chase, on behalf of a special committee of Dell’s board, contacted both Silver Lake and K.K.R. about initial feedback on their offers.

Nov. 16 and Nov. 17: Mr. Dell and other top Dell executives met with Silver Lake and K.K.R. to discuss potential revised bids. The company founder told both firms “that they should assume that he would be prepared to participate at the highest price they were willing to pay,” according to the filing.

Dec. 3: A Goldman Sachs analyst published a research note musing on the possibility of Dell going private, sending the company’s shares up to $10.06 a share. Later that day, K.K.R. dropped out of the sale process.

Dec. 4: K.K.R. elaborated, saying that its investment committee “was not able to get comfortable with the risks to the company associated with the uncertain PC market, and the concerns of industry analysts regarding the competitive pressures the company faced.”

Also that day, Silver Lake raised its bid to $12.70 a share and stripped away unspecified conditions from its earlier proposal.

Dec. 5: During a meeting of the special committee, JPMorgan bankers said that they considered Silver Lake and K.K.R. the most likely private equity bidders for Dell. A third investment firm, “Sponsor B” — which people briefed on the matter confirmed was TPG Capital — was the next most likely to make “a credible proposal.”

Dec. 7: Mr. Mandl of the Dell special committee reached out to TPG to invite it to consider making a bid. The private equity firm agreed, and two days later began looking at the company’s books.

Dec. 10: Mr. Mandl told Silver Lake that its bid of $12.70 was too low and would need to be raised much higher. At that meeting, the investment firm asked for permission to approach Microsoft about providing financing, as well as other potential lenders.

The special committee granted permission for that outreach the next day.

Dec. 14 to Dec. 16: Dell signed confidentiality agreements with a number of potential lenders to Silver Lake. The banks were the Royal Bank of Canada, Credit Suisse, Barclays and Bank of America Merrill Lynch.

Silver Lake subsequently asked for financing proposals by Jan. 3.

Dec. 21: TPG asked JPMorgan bankers for permission to submit its preliminary offer within the next few days.

Dec. 23: TPG dropped out from the bidding process, citing “concerns about the negative trends in gross margin and earnings in the PC business and the decline in the company’s operating performance, including the decline in its operating margins.”

Jan. 16: Silver Lake revised its bid, now fully financed by its four banks, to $12.90 a share. The proposal also included a $2 billion loan from Microsoft.

Jan. 17: Mr. Mandl, of the Dell special committee, told Mr. Dell that he was pessimistic that a deal could be reached, and asked for suggestions about how to improve the company while keeping it a publicly traded concern.

Mr. Dell reiterated that he believed taking the company private was its best course of action.

Jan. 19: Mr. Mandl told Mr. Dell that the special committee would accept an offer of $13.75 a share$13.25 a share.

Mr. Mandl told Silver Lake’s Egon Durban that his suggestion was “not intended to be the start of a price negotiation” — to which Mr. Durban said that the firm would go no higher and would have to walk away.

Later that day, JPMorgan began talking with Silver Lake about raising its bid.

Jan. 20: Silver Lake floated another revised bid, worth $13.50 a share. But JPMorgan said that likely wouldn’t pass muster.

Jan. 21: Silver Lake began discussing with Mr. Dell the possibility of his rolling over his shares in a deal below the price offered to other shareholders. The company founder said he was willing to value his shares at $13.36 a share to prod Silver Lake into offering $13.60 a share.

Jan. 24: Silver Lake told JPMorgan that it was prepared to offer $13.60 a share as its “best and final offer.”

Later that day, bankers at Evercore Partners, another adviser to the Dell special committee, received a number of unsolicited proposals. One came from an unnamed strategic bidder — which people briefed on the matter said was General Electric‘s GE Capital — offering to buy Dell’s financial services arm for book value, or about $3.5 billion to $4 billion.

And the Blackstone Group said it was interested in participating in any “go-shop” process aimed at flushing out alternatives to any bid from Mr. Dell and Silver Lake.

Jan. 29: Advisers to Dell’s special committee met with Southeastern and its outside lawyers. During the meeting the asset management firm said that it would oppose any deal in the range of $14 a share to $15 a share that didn’t give existing big investors, such as itself, the chance to roll over their stakes as part of a deal.

Informed of Southeastern’s demands later that day, Mr. Dell and Silver Lake said that they weren’t interested in any deal that would let public investors keep a stake in the company.

Feb. 3: Silver Lake offers to revise its bid in one of two ways. Either it would pay $13.60 a share and let Dell continue to pay its quarterly dividends until the deal closed, or $13.75 a share if Dell halted its dividends.

The special committee reiterated that it wouldn’t accept a price of $13.60 a share.

Feb. 4: Silver Lake contacted the special committee to say that it would be willing to pay $13.65 a share while allowing dividends to continue being paid.

Following a series of meetings, Dell’s special committee ultimately recommended that the full board accept the $13.65-a-share bid.

A little after 11 p.m., the Dell board voted to accept Silver Lake’s final bid. Lawyers for the two sides worked through the night to finalize the necessary legal documents.

Feb. 5: Dell and the buyers signed contracts and formally announced the deal.

Copyright 2013 The New York Times Company


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.