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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.

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 the slide presentation of Michael Dell referenced in the article below, see

Note: The version of the article below was distributed to Forum participants shortly after its publication. An updated, more detailed 6:07pm version was published in the print version of the newspaper.

 

Source: The Wall Street Journal, June 21, 2013 article

THE WALL STREET JOURNAL.

TECHNOLOGY  |  June 21, 2013, 8:52 a.m. ET

Michael Dell Presses Case for Buyout

 

By SHIRA OVIDE

Michael Dell is making a personal pitch to win support for the proposed deal to buy his company from public investors.

Mr. Dell pledged about $4.5 billion of his cash and stock toward the deal struck in February to take Dell Inc. private. The company chairman and CEO, who founded Dell as a college student nearly 30 years ago, hasn't said much since then about the $24.4 billion buyout, which is facing loud opposition from investor Carl Icahn and other Dell stockholders.

In a bullet-point presentation aimed at Dell shareholders and released Friday, Mr. Dell lays out his thinking on why the computer maker is ailing and needs time away from shareholder scrutiny to right itself.

"As a public company, we must take a more cautious approach to our transformation, because we must consider how our stock price will react to the steps we take and what effect that will have on the company and on customers and employees," Mr. Dell said in the eight-page investor presentation filed with the Securities and Exchange Commission. "This hurts the speed and efficacy of the transformation and is not good for the long-term health of the company."

Mr. Dell's presentation said the personal-computing market is deteriorating faster than expected, and Dell hasn't yet been able to make up the difference with newer businesses selling corporate software, computing storage and other services to companies.

Mr. Dell plans to meet soon with Dell stockholders to personally make his pitch, according to a person familiar with Mr. Dell's plans.

The presentation largely repeats the rationale for the buyout advanced by Dell's board for months, but it is the first time Mr. Dell himself has made a detailed case for why his company needs time and shelter to right itself. The efforts to take Dell private also reflect shortcomings of Mr. Dell's strategy, which has included billions of dollars in acquisitions to make Dell less dependent on the PC business.

Write to Shira Ovide at shira.ovide@wsj.com

 

Copyright ©2013 Dow Jones & Company, Inc. 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 dell@shareholderforum.com.

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