Reuters, August 1, 2013 article

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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.

The version of the article below was distributed to Forum participants shortly after its publication; for a later version, click here.

Source: Reuters, August 1, 2013 article

Icahn sues Dell in latest attempt to foil buyout

By Poornima Gupta
Thu Aug 1, 2013 5:37pm EDT

(Reuters) - Activist investor Carl Icahn sued Dell Inc and its board on Thursday, his latest attempt to derail a $24.4 billion buyout bid by the computer maker's founder and CEO Michael Dell.

Icahn asked a court to block rule changes Michael Dell has proposed ahead of a shareholder vote set for Friday. Icahn and his affiliates also want the court to stop Dell from changing the record date by which shareholders must have purchased their shares in order to vote.

They want to stop Michael Dell and private equity firm Silver Lake from voting any Dell shares acquired since February 5 when his buyout bid was announced, and to ensure the company does not change any shareholder voting requirements.

The lawsuit, filed in the Court of Chancery of Delaware, seeks to force the company to call an annual shareholder meeting on the same day as the special meeting on the buyout in case Dell Inc sets a new record date.

"My personal reaction, bombastic," said Larry Hamermesh, a professor at the Widener University School of Law in Wilmington, Delaware, referring to the lawsuit. "The linchpin of it seems to be that it's inappropriate to move or create a new record date because that takes advantage of a cynical effort to put shares in the hands of arbitrageurs who will want to vote for the deal."

Hamermesh pointed out that the judge who is likely to take this case, Leo Strine, often made the point in the takeover battle by industrial gases companies Air Products of rival Airgas that arbitrageurs are shareholders with the same rights.

Icahn, who views Michael Dell's offer as too low, has amassed an 8.7 percent stake in Dell and is leading a charge with Southeastern Asset Management against the buyout with an offer of his own. He has been campaigning to get Dell to set a date for the annual shareholder meeting so he can put up his own slate of directors for the company.

A spokesman for Dell Inc declined to comment on the suit but said Dell board has always sought to act in accordance with its fiduciary duties.

The go-private transaction has dragged on for months, jeopardizing the future of the computer maker facing a decline in its core business of personal computers amid the growing popularity of tablets. Michael Dell has said a turnaround of Dell should be done away from the scrutiny of public investors.

THIRD ATTEMPT AT VOTE

A vote on the buyout, which has been postponed twice, is now scheduled for Friday and sources familiar with the matter have said another adjournment is unlikely.

The special committee has said it would put the original buyout offer of $13.65 per share up for a shareholder vote.

Dell's special board committee rejected new voting terms in a revised bid by Michael Dell and Silver Lake, which raised their offer price last week by 10 cents to $13.75 per share on the condition the voting rules were changed.

Currently, shareholders who abstain are counted as voting against the deal, but the buyout group wanted those investors to be excluded from the tally.

Michael Dell's unusual demand sparked outrage among major investors, but the buyout group had said about 27 percent of the unaffiliated shares had not yet been voted and the presumption that these shares should be treated as if they had voted against the transaction was unfair.

The votes that have come in so far are split evenly between yes and no, sources have said, but there appears to be some signs that Michael Dell could get more votes.

Some of Dell's largest investors, who have abstained from voting on the buyout, told the company's board this week that they would back the deal at the buyout group's latest offer price, three sources close to the matter have told Reuters.

Dell's shares closed up 2.3 percent at $12.96 on the Nasdaq.

(Reporting by Poornima Gupta and Edwin Chan; 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.

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