Forum Home Page see Broadridge note below]

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, click here.

Forum Report: Dell Appraisal Rights

 

Questions Raised About Status of Lead Petitioners

Considering yesterday’s news report that the lead petitioners in the Dell appraisal case had voted their shares in favor of the merger,[1] I have asked counsel to Cavan Partners (the petitioner for Forum participants) to offer advice of alternatives to continue the appraisal proceeding with as little disruption as possible.

Based on a research report of fund managers voting for the merger at Dell’s September 2013 special meeting,[2] and on spot checks of the SEC filings and website reports of T Rowe Price and other funds managed by them, 23 of the 24 lead petitioner claimants owning all but 1,000 of the approximately 32 million shares appear to have voted “for” the merger.

Our primary concern is the reliable management of the Dell appraisal proceeding. While we should respect any efforts of T Rowe Price and their attorneys to present legal theories that their claims are eligible for dissenter rights to appraisal, those efforts are not directly relevant to other claims. What we must address is not the status of the T Rowe price funds as claimants, but their separate status as lead petitioners.

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Relying upon them as fiduciaries will necessarily be complicated by their concerns about eligibility that are not shared by the other claimants in the case.

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It must also be considered that support of their appointment as lead petitioners had been based on the statements in the verified petitions for their specified “Appraisal Shares” that “Petitioners have not voted in favor of the Transaction.”[3]

It is assumed that claimants, as well as the court and also Dell as the respondent, will want to be able to rely upon lead petitioners with uncomplicated interests in an efficient court appraisal of fair value. Any suggestions of issues or alternatives to be considered will be welcomed.

GL – May 4, 2015

Gary Lutin

Chairman, The Shareholder Forum

575 Madison Avenue, New York, New York 10022

Tel: 212-605-0335

Email: gl@shareholderforum.com

 

 

 

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.