April 15, 2013 Forum Report: Dell Board Supports Investor Rights to Ask Questions

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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.

For a printable copy of this report with its referenced letters, click here.

Forum Report: Fair Investor Access (Dell Valuation Project)

Dell Board Supports Investor Rights to Ask Questions

Letter from special committee’s legal advisor

Addressing investor questions after review of company proxy filings

Responding on Friday as requested in my April 10 letter,[1] Dell’s directors have indicated that they will not be supporting the company’s legal argument opposing stockholder rights to demand information.

Letter from special committee’s legal advisor

The legal advisor to Dell’s special committee has reported that the company’s directors are adhering to conventional views of their fiduciary duties relating to compliance with state and federal requirements for public reporting. Rejecting the additional fiduciary duties required by the company’s legal theory that stockholders should rely upon the board to determine their interests, it was specifically stated that the board recognizes it is “up to each stockholder to decide how to vote.”

The company’s legal argument opposing stockholder rights to ask questions is therefore no longer relevant, and the committee’s legal advisor indicated that the company does not have any new legal arguments.

In a reply sent this morning, I have encouraged the company’s cooperation to assure timely investor access to information required for decisions about Dell’s proposed buyout transaction.

Copies of both letters have been posted for your review:

April 12, 2013 letter from William D. Regner of Debevoise & Plimpton LLP to Gary Lutin of The Shareholder Forum (1 page, 43 KB, in PDF format)
April 15, 2013 letter from Gary Lutin of The Shareholder Forum to William D. Regner of Debevoise & Plimpton LLP (1 page, 103 KB, in PDF format)

Addressing investor questions after review of company proxy filings

Whether Dell decides to press their idea of processing separate responses for each stockholder or cooperates in developing more practical arrangements for public Forum reporting, all investors will benefit from our developing an updated list of information requirements based on a careful review of what the company has recently disclosed in its March 29, 2013 SEC filings of a preliminary proxy statement and related reports.[2] Many of you have already reported helpful observations, and there have also been useful news reports and commentaries about questions that need to be addressed.[3] Any additional suggestions of information that should be considered will be appreciated.

As always, your questions and comments will be welcomed.

GL – April 15, 2013

Gary Lutin

Chairman, The Shareholder Forum

575 Madison Avenue, New York, New York 10022

Tel: 212-605-0335

Email: gl@shareholderforum.com

[1] See April 11, 2013 Forum Report: Dell Board’s Choice Between Accepting Fiduciary Duty or Respecting Investor Rights to Ask Questions.

[2] See March 29, 2013 Dell Inc. SEC Schedule 14A Preliminary Proxy Statement (275 pages, 1,320 KB, in PDF format); see also related March 29, 2013 Dell Inc. Schedule 13E-3 Transaction Statement (758 pages, 37,060 KB, in PDF format) and March 29, 2013 Dell Inc. Schedule 13E-3 Transaction Statement, Amendment No. 1 (291 pages, 22,480 KB, in PDF format).

[3] See examples:

· March 30, 2013 Barron's: "Michael Dell's Folly"

· April 1, 2013 DealBreaker: "Dell’s Board Was So Fed Up With Its Managers That It Sold Them The Company"

· April 2, 2013 Financial Times Lex: "Dell: computing the price | Investment bankers ignore precedent transaction multiples"

· April 9, 2013 Reuters: "Dell's evaluation of buyout bid flawed: shareholder"

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 dell@shareholderforum.com.

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.