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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.

 

Forum distribution:

Public court filing reports appraisal petitioner knew of voting "discrepancy" since 2014, attributes to ISS "anomaly"

 

For the public version of the May 8, 2015 letter referenced in the article below, filed on May 15, presenting facts as well as legal principles supporting the dismissal of T Rowe Price "dissenter" rights to appraisal of Dell stock, see

 

Source: USA Today, May 18, 2015

 

Dell moves to boot T. Rowe from appraisal case

 
Kaja Whitehouse, USAToday    9:02 a.m. EDT May 18, 2015

 

(Photo: Paul Sakuma, AP)

  

Tech titan Michael Dell is seeking to prove that mutual fund giant T. Rowe Price doesn't deserve a penny more than the $13.75 a share paid to other shareholders for Dell's 2013 going-private transaction.

Lawyers for Dell asked a Delaware Chancery Court judge to decide whether T. Rowe should be allowed to continue its pursuit for more money given new "evidence" that it voted in favor of the transaction. T. Rowe should be "put to proof" on its claims in light of the new evidence, Dell's lawyers said in a letter to the judge that was unsealed Friday.

Dell took the computer company private in 2013 for $25 billion, or $13.75 a share. T. Rowe Price publicly opposed the deal and is now the lead petitioner in a Delaware court case seeking more money.

On May 4th, USA TODAY reported that T. Rowe voted in favor of the transaction despite publicly rejecting the deal's price tag leading up to the vote -- and afterward in court filings.

USA TODAY

Money manager hits awkward snag in Dell buyout case

T. Rowe's contradictory voting record threatens to undermine its position that it deserves more than $13.75 a share.

Dell stands to save a lot of money if it succeeds in booting T. Rowe from the case. T. Rowe is not only the lead petitioner in the case, but also the largest shareholder with close to 30 million Dell shares.

On May 6th, Dell's lawyers questioned T. Rowe manager Kenneth Allen about when he learned that T. Rowe had actually voted in favor of the deal, according to the May 8th letter.

Allen, portfolio manager for the T. Rowe Science and Technology fund, said he had learned of an "anomaly" in the voting in "the latter half of 2014," according to the letter.

T. Rowe's Allan attributed the voting "anomaly" to ISS, a firm that advises shareholders on how to vote and often casts votes for shareholders, according to their instructions.

"Unless the T. Rowe Petitioners can demonstrate to the Court's satisfaction that their shares were not voted in favor of the merger, notwithstanding the instructions that ISS gave, the shares in question should be excluded from receiving the appraisal remedy," Dell's lawyer, Gregory Williams, said in the May 8th letter.

Mutual fund companies are required to publicly disclose their voting records once a year. In this case, T. Rowe opened the door to its massive stash of voting records in August 2014 -- a full year after the controversial Dell deal went to a vote.

 

© 2015 USATODAY, a division of Gannett Satellite Information Network, 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 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.