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

Forum Report: Fair Investor Access (Dell Valuation Project)

 

Dell Now Responding to Investor Information Requirements

Dell is no longer refusing to respond to investor information requirements. In a Friday letter answering my simplified May 17 demand for records,[1] the company stated that it was not in possession of any of the specified records relating to Mr. Dell’s April speech to Silver Lake investors, effectively conceding the obligation to provide records if in the company’s possession. I therefore followed up early this morning with a new specification of records relating to (a) the reported speeches or presentations of Dell Software division executives at an April event[2] and (b) complete copies of the fifteen exhibits of advisor presentations and discussion materials from which the company had redacted sections in filings of SEC Schedule 13E-3 Transaction Statements.

Copies of Dell’s Friday evening response letter and my new demand letter, which includes a list of the fifteen redacted exhibits, are available on the Forum’s website:

For those of you concerned with researching the Dell valuation or similar situations, my letter also refers to the need for assuring that a researcher’s reports to an investor do not disclose any confidential information that might restrict the investor’s actions. (See page 3.) Any thoughts will be appreciated about how the requirements for an independent reviewer might differ from the conventional requirements of the financial advisors, lawyers, auditors and others who are engaged directly by a company to prepare reports that will not be considered private.

I will of course also welcome your comments and questions on any other subjects.

GL – May 28, 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 May 17, 2013 Forum Report: Simplified Demand to Dell for Timely Access to Information.

[2] See April 24, 2013 Wall Street Journal: “Dell Talks Up Its Software Future.”

 

 

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.