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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 a copy of the letter as transmitted, click here.

Forum Report: Fair Investor Access (Dell Valuation Project)

 

Proceeding with Fair Access to Dell Investor Information

Bypassing the Litigation Trap

Dell Responsibility for Management Disclosures

Following up on my March 15, 2013 letter to Dell, I sent the company’s legal officer another letter at the end of business yesterday confirming that the Shareholder Forum will simply revise the statements in its demand for records to accommodate Dell’s unusual views of the formal requirements. The letter also refers to recent news reports that suggest a need for Dell assurances of responsibility for public disclosures.

The text of the letter is copied below.

Bypassing the Litigation Trap

The Forum’s accommodation of Dell’s argued views of statement requirements will require only some editing of a letter, so that we can be ready to proceed within a few days. The conventional path of taking the argument to court, even if it is assumed certain that the court would support the Forum’s demand, could take several weeks and would cost the company – and its shareholders – considerably more than the planned editing of a letter.

This practical path around the litigation trap will not prevent us from seeking court enforcement if the editing accommodation is rejected.

Dell Responsibility for Management Disclosures

Two recent news reports of apparent management leaks that had been distributed to Forum participants (see the letter’s footnote) raised concerns about the possibility of recurrences that could confuse our planned review and reporting process. While it is not appropriate for the Forum to address regulatory issues, it is very important to maintain the integrity of our project. In this context, we will be asking Dell to provide assurances of their responsibility for appropriate reporting of any disclosures by company representatives, whether authorized or not.

Your questions and comments will be welcomed.

GL – March 19, 2013

Gary Lutin

Chairman, The Shareholder Forum

575 Madison Avenue, New York, New York 10022

Tel: 212-605-0335

Email: gl@shareholderforum.com

 

 

For a printable copy of this letter as transmitted, click here.

  [letterhead of The Shareholder Forum]

 

March 18, 2013

By email

Ms. Janet B. Wright

Vice President – Corporate, Securities & Finance Counsel

Dell Inc.

One Dell Way, RR1-33

Round Rock, Texas  78682

Re:       Demands for records

Dear Ms. Wright:

Not having heard from you in response to Friday’s invitation to develop a collaborative process, I will be preparing a revised letter to accommodate your views of DGCL Section 220 statement requirements for proceeding with the formal records demand. This accommodation is intended to be a simpler and faster alternative to seeking a court’s clarification of what is required, and I therefore ask that you tell me by tomorrow if you have any other views I should consider in preparing the revised letter.

Your advice of any related matters to be considered in the revised letter will also be appreciated. For example, a draft of your proposed confidentiality agreement will be especially helpful to assure the revised letter’s conformance with expected provisions.

On issues relating to confidentiality, I will want Dell to assure us that it will assume full responsibility for any disclosures made by its own representatives. Friday’s coincidental reports by two different news organizations of unidentified “sources” of non-public  information[1] raised concerns about possible disruptions of the Forum’s review process. Our confidentiality agreement should require Dell’s appropriate reporting of any such management leaks, whether authorized or not, to assure fair public disclosure and SEC review of what may be considered proxy solicitation material.

Sincerely yours,

/s

Gary Lutin

 

cc:        S. Mark Hurd, Esquire

William D. Regner, Esquire

Gregory P. Williams, Esquire

 

 

 

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.