Forum Home Page see Broadridge note below]

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

Forum Report: Fair Investor Access (Dell Valuation Project)

 

Obtaining the Same Information as Dell’s Advisors

Request and demand for records

Shielding investors from confidentiality constraints

Independent actions of Southeastern Asset Management

To assure the ability of public investors to fairly consider the transaction proposed by Dell’s management, the Shareholder Forum has asked the company to provide our valuation project’s experts with all the information that was provided to each of the three experts they had engaged to advise the corporation and its board’s special committee. The request was supported by a formal “demand for records” pursuant to a provision of the corporation law in Delaware, where Dell is incorporated, that gives a company’s shareholders the right to see any records “reasonably related to such person's interest as a stockholder.”[1]

The letter, which includes specifications of the required records as well as suggested provisions for confidentiality, has been posted on the Forum’s website:

It should be noted that the letter’s reference to a five day period for response is based on the Delaware law’s provision, and that it can be extended by agreement. Based on past Forum experience, it may take a week or two to define arrangements for Dell’s providing the required information to the Forum’s designated representatives.

Shielding investors from confidentiality constraints

For participants in the Dell valuation project who are unfamiliar with the Forum’s practices relating to records demands, investors will not be given any non-public information that would subject them to confidentiality obligations or raise questions about “insider” status. Only designated Forum representatives will agree to confidentiality and see non-public information, and the reports they prepare will be made publicly available. Any investor will therefore be able to use the Forum’s publicly reported information in decisions about Dell.

Independent actions of Southeastern Asset Management

Responding to questions about Southeastern Asset Management’s involvement in this project,[2] they have given me permission to report that they are acting independently of the Forum in relation to Dell.[3] They have not engaged in any private communications with the Forum concerning Dell, other than the requested permission to report their independent course, and have no access to information about the Dell valuation project other than what is publicly available in Forum distributions and website postings for all other investors to see.

Specifically regarding yesterday’s Forum letter to Dell, Southeastern had no knowledge of our plans to present a demand for records other than what has been publicly reported.[4] The timing of their demand for Dell’s stockholder lists was coincidental. A demand for names and addresses of stockholders is a routine preparation for proxy solicitation, and is unrelated to a demand for information needed to consider investor interests.

It should also be emphasized that the Forum’s project for providing all Dell investors with fair access to decision-making information must be conducted without any advocacy bias, whether the advocacy position is that of a management proponent or of an investor opponent. An independent valuation must be, after all, independent.

GL – March 6, 2013

Gary Lutin

Chairman, The Shareholder Forum

575 Madison Avenue, New York, New York 10022

Tel: 212-605-0335

Email: gl@shareholderforum.com


 

[2] Southeastern Asset Management, which has been a publicly reported supporter of a previous Forum program addressing their investment interests, is the largest unaffiliated shareholder of Dell and has reported its opposition to the proposed Dell transaction; see March 5, 2013 Wall Street Journal Deal Journal: "Southeastern Says Dell Emphasizing Struggling PC’s to Justify Deal Price."

[3] Shareholder Forum privacy policies prohibit identifying participants without their specific permission; see the Forum’s posted Conditions of Participation.

 

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.