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.
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 Special Committee
letter referenced in the article below, see
Michael S. Dell, the founder of the company that bears his name.
A special committee of the
Dell Inc. board said on Wednesday that it would be willing to accept the
latest takeover bid by its founder, worth $13.75 a share, if he dropped his
demand for a change to the voting rules for his leveraged buyout.
In exchange for dropping
the voting rule demand, the Dell directors would move a shareholder vote
from Friday to sometime in mid-September. That would also move the record
date – the date by which shareholders must have held shares to be considered
eligible – to around Aug. 10 from June 3, possibly allowing more investors
favorably disposed to the deal to vote and change the tide.
But if
Michael S. Dell and his partner, the investment firm Silver Lake, refuse
to drop their demand, then a vote on the current bid of $13.65 a share will
proceed as scheduled on Friday. That offer would probably fail, given firm
opposition from a number of shareholders like the billionaire
Carl C. Icahn and a large block of shares that have not been voted –
which under the current rules count as no votes.
A person close to Mr. Dell
and Silver Lake argued that they were unwilling to budge and now expected
that, absent a change to the voting rules, the multibillion-dollar deal
would fail. Even changing the record date would not change the mathematics
enough to help the proposed takeover succeed, this person said.
Last week, Mr. Dell and
Silver Lake proposed raising their proposal – in what they called their best
and final offer – by 10 cents, to $13.75 a share, in exchange for the
committee declaring that absentee votes would no longer count as no votes.
They have argued that the current standard is unfair, since it is hard to
determine the intent of absentee votes. They are also motivated by promising
signs that they would win if the rule were changed: according to recent
tallies of the vote, about 579 million have been cast in favor of the deal,
while 563 million have been voted against, people briefed on the matter have
said.
The Dell special
committee, however, indicated that it would not be willing to change the
voting rules for anything less than $14 a share, a person briefed on its
deliberations said.
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.
