Dell Wants To Probe T. Rowe Price's Vote In
Law360, Wilmington (May 11,
2015, 8:00 PM ET) --
Dell Inc. told a Delaware Chancery judge Monday it wants to
investigate an apparent discrepancy between public opposition and what
appears to be the actual voting record of
T. Rowe Price Associates Inc. funds, some of the largest stockholders
seeking share appraisal in the computer company’s $25 billion go-private
During a hearing in Wilmington, Dell attorney Gregory P. Williams of
Richards Layton & Finger PA said the company intends to take discovery
connected to how T. Rowe Price’s funds voted for the deal, days after he
sent a sealed letter to the court that in a public description stated was
“regarding recent factual development potentially affecting the
entitlement to the statutory appraisal remedy of certain claimants.”
The text of the letter was not available Monday, but several exhibits are
available for public view, and they appear to be records showing T. Rowe
Price funds did vote in favor of Dell's $24.9 billion buyout by founder
Michael Dell and private equity firm
Silver Lake Partners, and a report published last week by USA Today
said the asset management firm's regulatory filings showed it voted in
favor of the transaction across its funds.
Under Delaware law, shareholders are eligible to seek appraisal of their
shares after a merger if they continuously held stock through the deal's
closure and neither voted in favor of the transaction nor consented to it
T. Rowe Price has been a vocal and consistent opponent of the deal, and
stated in its appraisal petition with the Chancery Court in February 2014
that its petitioning funds “have not voted in favor of the transaction.”
When contacted Monday, a representative for the asset management firm said
the apparent discrepancy in positions wasn’t relevant to its push to have
its shares appraised, and potentially receive a larger payout from the
“We are aware of a discrepancy in the communication of our voting
instruction on the Dell buyout,” a representative said in an emailed
statement. “T. Rowe Price has always opposed the Dell buyout and has made
that opposition well known. We view the discrepancy as irrelevant for
purposes of our ability to pursue appraisal. Our goal remains to secure
fair value from this deal for our clients.”
If Dell were to be successful in seeing T. Rowe Price’s appraisal demand
tossed over the issue it would eliminate one of the largest shareholders
challenging the price of the deal, which is set to go before
the Chancery Court for a fact trial in October.
The appraisal action was first lodged in October 2013 by Cavan Partners —
which held 100 shares, according to court records — and the case was
eventually consolidated with dozens of other shareholders claims.
A majority of Dell shareholders
approved the buyout a month earlier, after then-Chancellor
Leo E. Strine Jr.
upheld last-minute tweaks by Dell's board to voting rules and
record date, dousing a stiff and well-publicized opposition campaign.
Vice Chancellor J. Travis Laster did not make any rulings during the
hearing Monday, which was dedicated to the questions of whether some of
the appraisal claims — many by retail holders — ought to be thrown out for
not being eligible under Delaware law.
One of the arguments focused on a practice where petitioners’ custodial
banks would re-register their shares in the name of a different nominee
record holder, and Dell said that should disqualify those particular
appraisal claims for not meeting the legal requirement of being a
But the petitioners countered that the practice is a standard one for
custodial banks, done without their knowledge or explicit consent, and
their appraisal rights are indeed perfected under Delaware law.
To knock the appraisal claims out of the running would simply be Dell
interpreting statute simply as a “gotcha,” and the Chancery Court, as a
court of equity, ought to be able to go beyond what is an unreasonable
reading of the law, attorney for the petitioners Stuart M. Grant of
Grant & Eisenhofer PA said in court.
Vice Chancellor Laster said he would take that matter under advisement and
likely issue an opinion in writing.
Dell is represented by Gregory P. Williams, John D. Hendershot, Susan M.
Hannigan and Andrew J. Peach Richards Layton & Finger PA and John L.
Latham, Susan E. Hurd, Gidon M. Caine and Charles W. Cox of
Alston & Bird LLP.
The petitioners are represented by Stuart M. Grant, Michael J. Barry,
Christine M. Mackintosh, Jennifer A. Williams and Rebecca A. Musarra of
Grant & Eisenhofer PA.
The case is In re: Appraisal of Dell Inc., case number 9322, in the
Delaware Court of Chancery.
--Additional reporting by Chelsea Naso. Editing by Chris Yates.
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