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.


Forum reference:

Court decision distinguishes fund manager's control of votes from untraceable votes of appraisal arbitrage shares


For the decision reported below, see

Note: The decision addresses voting of 31,052,130 Dell shares in 14 mutual fund and pension accounts managed by T. Rowe Price, each of which is identified on page 20 (PDF p.21) of the Opinion. In a previous July 13, 2015, Memorandum Opinion in the same case, the court determined that an additional 922,975 shares in 5 other accounts managed by T. Rowe Price were made ineligible for appraisal rights by administrative errors in the maintenance of continuous ownership. According to a July 30, 2015 court submission (footnote #1 on  page 1 of the Brief in Support of Motion; PDF p.10), only one of the accounts managed by T. Rowe Price, the Morgan Stanley Defined Contribution Trust with 357,500 shares, remains eligible for appraisal as a result of the fund manager having failed to process any voting instructions for that account.

Court records 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: Reuters, May 13, 2016 article



Fri May 13, 2016 2:57pm EDT

T Rowe Price loses lawsuit over 2013 Dell buyout


T. Rowe Price Group Inc cannot sue computer maker Dell Inc for a higher price in the 2013 buyout by its founder because the fund company voted, albeit mistakenly, in favor of the deal, a Delaware judge has ruled.

The unusual dispute leading to Wednesday's decision stemmed from the mutual fund company's bid to recoup more for its 27 million Dell shares than the $13.75 per share paid in the buyout, by using a type of lawsuit known as appraisal.

After Michael Dell and private equity firm Silver Lake took the computer maker private, hundreds of shareholders unhappy with the terms, egged on by billionaire activist investor Carl Icahn, sought to have a judge review whether the price was fair.

The initial amount of Dell stock being appraised made it one of the biggest cases of its kind.

To qualify for an appraisal, a shareholder must not vote for a deal and must continuously hold the stock until the deal closes.

T. Rowe Price actively opposed the buyout and thought it voted against it.

But according to Wednesday's decision, its voting system generated instructions to vote in favor of the merger. The instructions were passed through stockholder service firms including Institutional Shareholder Services Inc, Broadridge Financial Solutions and Cede & Co.

The error proved fatal. "The T. Rowe Petitioners' shares do not qualify for appraisal," Judge Travis Laster of Delaware's Court of Chancery wrote in a 70-page opinion.

Bill Benintende, a T. Rowe Price spokesman, said: "We're disappointed in the ruling and are in the process of reviewing the opinion and evaluating our options."

Hedge funds that specialize in arbitration cases have been criticized for buying stock of companies involved in mergers so late in the process that they are not entitled to vote.

Delaware courts have found that as long as they did not vote for deals, they can seek appraisals.

But mutual funds, unlike hedge funds, must report how they voted, which is how T. Rowe Price's Dell vote came to light.

Last year, Laster ruled that T. Rowe Price and other funds were beneficial but not continuous legal owners of nearly 1 million Dell shares and could not seek an appraisal.

The court has not determined a fair value for the Dell stock.


© 2016 Reuters All Rights Reserved

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.