Austin Business Journal, July 17, 2015 article: "Report: Dell considers spinning out companies" [Dell's response to private equity investor's plan for unlocking intrinsic value]

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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.

Source: Austin Business Journal, July 17, 2015 article

TechFlash

Report: Dell considers spinning out companies

Jul 17, 2015, 2:43pm CDT

Christopher Calnan

Staff Writer

Austin Business Journal

Nick Simonite/ABJ

Dell Inc. is considering spinning off some of its divisions, but any decision would be far off, a company board member said.

Dell Inc. is reportedly considering spinning out fast-growing divisions to raise their profiles, an investor and board member said.

The Round Rock company could combine such divisions into separate companies to emulate other tech giants such as EMC Corp. that have successfully followed that strategy, Silver Lake Partners Managing Partner Egon Durban said this week, according to Fortune.

California-based Silver Lake Partners formed an investors group with CEO Michael Dell to complete a $24.9 billion leveraged buyout of Dell shareholders in late 2013. Spinning out Dell Inc.’s stronger divisions would make sense, Durban said.

I think what (EMC CEO Joe) Tucci has done with VMWare is a good example of that, where you can take something that people don’t fully understand, buried in the portfolio, and unlock it while still having a partnership with the mothership,” he said.

Durban said SecureWorks, a cybersecurity business acquired by Dell in 2011 for $612 million, and Boomi, a cloud integration software platform acquired in 2010 for an undisclosed amount, would be likely candidates.

In response, Dell spokesman David Frink issued a written statement: "Dell is focused on delivering technology solutions that work harder for our customers and helps them succeed. We have our strongest-ever product and services portfolio and have acquired significant new skills and capabilities over the past several years. We won’t have additional comment on Mr. Durban’s remarks."

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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