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:

Decision provides guidance on how court will determine compliance with voting requirements for appraisal rights


For the decision reported below, see

Note: As indicated in the article, the publisher (identified in the appraisal proceeding's records as The Bureau of National Affairs, Inc., now a subsidiary of Bloomberg) was one of the 14 mutual fund and pension accounts managed by T. Rowe Price, each of which is listed on page 20 (PDF p.21) of the Opinion, aggregately seeking appraisal of 31,052,130 Dell shares.

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: Bloomberg BNA, May 18, 2016 article

May 18, 2016

‘Voting Mix-Up'Causes T.Rowe to Lose Dell Appraisal Suit

From Corporate Law & Accountability Report

By Michael Greene

May 12 — Several T.Rowe Price & Associates Inc. funds can't proceed on an appraisal lawsuit arising out of Dell Inc.'s 2013 buyout, the Delaware Chancery Court held May 11.

Vice Chancellor J. Travis Laster ruled that the 14 petitioners—T.Rowe Price mutual funds or institutions that relied on T.Rowe to direct the voting of their shares—hadn't complied with the “Dissenter Requirement” of the state's appraisal statute.

Under Delaware law, stockholders that vote in favor of a merger can't seek an appraisal over how much their shares are worth.

Although T.Rowe Price had opposed the deal, the court found evidence in the record showing that a “voting mix-up” caused the petitioners' shares to be voted “for” the merger.

Laster dismissed T.Rowe Price's claims, ruling that the petitioners weren't entitled to more than the merger price. In his detailed ruling, the judge also provided guidance on how the court will examine whether the Dissenter Requirement is met in appraisal proceedings.

Bloomberg BNA, which relied on T.Rowe Price to vote its Dell shares, was a petitioner in the lawsuit.

‘Shifting the Burden.'

The petitioners' shares were held in the name of Depository Trust Co.'s nominee, Cede & Co. In what the court called a “daisy chain of authorizations,” T.Rowe Price had contracted with Institutional Shareholder Services to collect and submit its voting instructions to Broadridge Financial Solutions Inc., who had the power of attorney to execute proxies.

According to the court's decision, T.Rowe Price's instructions to vote against the merger were inadvertently deleted and replaced.

Laster distinguished the case from two 2015 chancery court decisions that found a petitioner had met its initial burden under the Dissenter Requirement by showing that Cede held a sufficient number of shares that weren't voted in favor of the merger to cover the appraisal class (13 CARE 85, 1/9/15).

Laster clarified that after a petitioner has shown that Cede held the requisite number of shares, the company can rebut by showing that Cede actually voted the shares in favor of the merger.

The judge found that unlike the circumstances in the 2015 chancery court decisions, here there was evidence on how Cede had voted the petitioners' shares.

“It simply is not true that it is impossible to determine how Cede voted the shares over which the T. Rowe Petitioners exercised voting authority,” he wrote. “When questions arose about how the shares were voted, T. Rowe, ISS, and Broadridge all acted as if they could identify the shares and how they were voted, and they came to the conclusion that Broadridge voted the shares ‘FOR' the Merger.”

To contact the reporter on this story: Michael Greene in Washington at

To contact the editor responsible for this story: Yin Wilczek at

For More Information

The opinion is available at 20160511_DelCh-Opinion.pdf.


Copyright © 2016 The Bureau of National Affairs, 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

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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.