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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.


For a printable copy of this report, click here.

Forum Report: Dell Appraisal Rights


Dell Decision to Rely Upon Court for Definition of Settlement Offer

Dell’s position relating to settlement obligations

Need for court definition of conditions

Dell has responded as promised to the questions reported last week about their obligation to offer other appraisal claimants the same terms of settlement as those given to T Rowe Price.[1]

Dell’s position relating to settlement obligations

These were the answers provided by Dell’s attorney:[2]

1.   They will not provide a copy of the written settlement agreement because “the settlement agreement between Dell and the T. Rowe funds is, by its terms, confidential.”

2.   The court was not given a copy of the agreement, and its review and approval of the proposed settlement was based only on “[t]he summary of the settlement that was provided to the Court [which] was done orally as reflected by the transcript of record.”[3]

3.   “Dell has not entered into any other settlement with dissenting shareholders in connection with the going private transaction.”

It should be noted that Dell and T Rowe Price have not disputed the obligation to offer all former stockholders the same terms of settlement, but they continue to argue that the terms they must offer should be narrowly defined as $.88 per share upon acceptance of only the $13.75 per share offer price. There is no indication, though, that they have made even this narrowly defined offer available to other former stockholders.[4]

Need for court definition of conditions

In any event, Dell and T Rowe Price were advised of the view that the information they have chosen to provide, to the court and to the appraisal claimants, “cannot support any definition of terms other than either (a) a payment by Dell of $.88 per share for a claimant’s waiver of rights to appeal the Court’s determination of what Dell is obligated to pay that claimant, or (b) participation in the $28 million that Dell paid T Rowe Price and Lead Counsel to waive appeals.”[5]

Under these circumstances, on September 22 Dell was encouraged to choose between proceeding with an offer based on either of these available definitions of terms or, alternatively, providing credible support of a different definition. Dell was also advised that if it did not make this choice itself by September 26, the Forum’s representative petitioner, Cavan, would have to ask the court to make that decision.[6]

Since Dell has not made that necessary choice, Cavan’s counsel will be proceeding to seek the court’s guidance.

The need to initiate this additional distraction from the concluding resolution of what should be a model appraisal case is especially frustrating, since it could have been avoided if Lead Counsel had followed the court’s explicit instructions in the June 27 conference call to report the proposed settlement to other petitioners and ask if they wanted to participate in another call with the court before proceeding with a formal request for an order to approve a settlement.[7] Unfortunately, I was not aware of the court’s provision for hearing other parties until I obtained an unpublished copy of the transcript directly from the court on July 6. (The transcript was not publicly filed in the court docket until July 12, shortly after being posted on the Forum website and referenced in a Forum report.[8]) By that time, the June 29 order had been issued and it therefore seemed most practical to encourage a resolution by the parties, a decision that resulted in more than two months of fruitless efforts. I offer my regrets to all the claimants who are still waiting for their payment of fair value.

GL – September 28, 2016

Gary Lutin

Chairman, The Shareholder Forum

575 Madison Avenue, New York, New York 10022

Tel: 212-605-0335



[2] See September 14-26, 2016 email exchanges among Gary Lutin, John D. Hendershot and Stuart M. Grant (4 pages, 190 KB, in PDF format); unless otherwise indicated, quoted statements are from Mr. Hendershot’s September 21, 2016 email. Note: there has been no further response from Dell or T Rowe Price.

[3] Dell’s representative stated during the June 27, 2016 conference that the settlement was negotiated with “former stockholders” who “still have appeal rights,” and that “what we have done is agreed that we will pay those folks in exchange for releases where they release their appeal rights. We have agreed to pay them an amount of interest. It's not the statutory interest, it's -- I think it works out to be between 2 and 3 percent, but the grand total is 88 cents per share, and it's $28 million in the aggregate.” See pages 4-5 of the June 27, 2016 (reported June 29, 2016), In Re: Appraisal of Dell, Inc. (Consol. C. A. No. 9322-VCL): Transcription of Teleconference Regarding Proposed Settlement (23 pages, 67 KB, in PDF format). Subsequent discussions reported in the transcript address the application of these terms to the T Rowe Price accounts that had been determined ineligible based on either ownership or voting issues, but do not indicate whether the release of rights to appeal applied to (i) only the July 28, 2015 Order relating to ownership issues, (ii) only the May 11, 2016 Opinion relating to voting issues, (iii) only the May 31, 2016 Order denying interest accruals, (iv) all or some combination of those court decisions, or (v) all decisions that would be subject to appeal upon the court’s final order in the case.

[4] It can be reasonably assumed that, if offered, many former Dell stockholders would have readily accepted this narrowly defined settlement since its terms would clearly benefit the many claimants that shared the same fate as T Rowe Price in being determined entitled to only the $13.75 per share offer price. For example, three claimants with 752,691 shares were determined ineligible for “similar reasons” in the same July 28, 2015 Order that dismissed five T Rowe Price accounts based on ownership issues, in a decision the court itself thought should be appealed.

[5] See the September 22, 2016 email of Gary Lutin to John D. Hendershot in the previously referenced September 14-26, 2016 email exchanges.

[6] See the email referenced above in footnote 5

[7] The court stated “Tell the … other folks as soon as you can that we've had this call. Tell them that I'm more than happy to have another call with them, and then we'll go forward from there.” See page 18 of the previously referenced June 27, 2016 Transcription.

[8] See the “Need to know what was offered to ineligible clients” section of the July 12, 2016 Forum Report: Investigating Opportunities to Negotiate an Extra $.88 per Share.



This project is being 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. has declined the Forum's invitation to provide leadership of this project, but will be encouraged to collaborate in its progress to assure cost-efficient, timely delivery of information relevant to investor decisions.

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.