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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 a subsequent article about the rumors reported below, see

May 7, 2013 Wall Street Journal: "Icahn, Southeastern Weigh Teaming Up on Dell Nominations"

Source: New York Post, May 6, 2013 article

Furor in the Dell: Icahn eyes board fight

By JOSH KOSMAN and MARK DECAMBRE

Last Updated: 12:58 AM, May 6, 2013

Posted: 10:18 PM, May 5, 2013

Carl Icahn is not done with Dell.

The activist is preparing to team up with Southeastern Asset Management, the PC-maker’s largest independent shareholder, in the next week in a push to get directors onto the tech giant’s board, two sources close to the situation said.

The move is expected on or before May 13, the deadline to launch a proxy contest before this summer’s still-unscheduled annual meeting, the sources said.

Such an action by the two could be a prelude to them calling on the ailing tech firm to sell parts of the business and to pay shareholders a dividend by repatriating some of the $9 billion in cash it has sitting offshore, sources said.

Icahn and Southeastern have been down that road before. Last year both backed a similar move when they nominated directors at Chesapeake Energy, one of the sources said.

In May 2012, Icahn sent a letter to Chesapeake proposing four new directors. Two would be picked by him and two by Southeastern.

Icahn also called on Chesapeake to stop spending on noncore assets.

At the center of the battle is a move by company founder and CEO Michael Dell and Silver Lake Partners to buy the business for $13.65 a share, or $24 billion.

Icahn then made a competing, non-binding offer to buy 58 percent of Dell. The board said it would consider it.

Dell offered to pay Icahn $25 million to cover his expenses so he could do enough homework to make a binding offer – if, in exchange, the New York billionaire agreed not to launch a proxy fight, one of the sources said.

Icahn bristled at the offer – and turned it down, the source said.

Dell’s entire 12-member board is up for re-election. One member, James Breyer, head of its finance committee, said last week he would not stand for re-election.

Icahn has some ammunition in criticizing the board, sources said.

The board has faced criticism for letting Michael Dell structure a leveraged buyout without facing competition — and then only allowing competing bids during a 45-day go-shop period.

Dell will give Silver Lake Capital a $185 million break-up fee if it turns down their offer, giving them an advantage over rivals.

The Blackstone Group considered making a bid but backed off, saying it was misled as to how steep global PC sales were falling off. But before it backed out, Michael Dell had approached Blackstone to see if he could run the company should its prospective bid win the day, according to a public filing.

This is despite Michael Dell agreeing previously to give voting support behind any proposal superior to his own.

Icahn and Southeastern declined to comment; and Dell Inc. did not return calls.

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.