Reuters, April 9, 2013 article

Forum Home Page see Broadridge note below]

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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 shareholder letter to Dell addressed in the article below, see the Southeastern Asset Management press release:

April 9, 2013, Southeastern Asset Management (as published by PR Newswire): "Southeastern Asset Management Issues Open Letter to Dell Special Committee"

Source: Reuters, April 9, 2013 article

Dell's evaluation of buyout bid flawed: shareholder

Tue Apr 9, 2013 11:46am EDT

(Reuters) - Southeastern Asset Management, the activist investor that owns 8.4 percent of Dell Inc, said on Tuesday the computer maker's evaluation of a $24.4 billion leveraged buyout deal with its founder and buyout firm Silver Lake was flawed.

Southeastern published a letter it sent to Dell's board of directors asserting the company's March 29 proxy statement fails to make a compelling case for shareholders to accept the $13.65 per share offer from Michael Dell and Silver Lake. The letter says Dell's special committee did not properly explore all options.

Citing excerpts from Dell's proxy statement, Southeastern said the company did not properly explain why it did not entertain a buyout offer that would allow shareholders to elect whether they wanted to be paid in cash or stock. It urged Dell's special committee to negotiate now "in good faith."

Dell has received two alternative buyout proposals from Blackstone Group LP and billionaire investor Carl Icahn that Dell has said could ultimately be expected to result in superior offers. Still, the computer maker has recommended accepting the offer on the table from Michael Dell and Silver Lake.

Southeastern Asset Management, the company's largest shareholder after Michael Dell, has been a staunch opponent of the founder's buyout offer.

Dell was regarded as a model of innovation as recently as the early 2000s, pioneering online ordering of custom-configured PCs and working closely with Asian component suppliers and manufacturers to assure rock-bottom production costs.

But as of 2012's fourth quarter, Dell's share of the global PC market had slipped to just above 10 percent from 12.5 percent a year earlier, according to research house IDC.

(Reporting by Greg Roumeliotis and Nicola Leske in New York; Editing by Gerald E. McCormick and David Gregorio)

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.

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