U.S. court rules $24.9 billion Dell buyout underpriced by 22 percent

Tue May 31, 2016 10:30pm EDT
 
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By Tom Hals

WILMINGTON, Del (Reuters) - Michael Dell and Silver Lake Partners underpriced their 2013 $24.9 billion buyout of Dell Inc by about 22 percent and may have to pay tens of millions to investors who opposed the deal for the computer maker, a Delaware judge ruled on Tuesday.

The ruling, which applies to about 5.5 million Dell shares, is a victory for the specialized hedge funds that have increasingly tried to squeeze more money from mergers using a type of lawsuit known as appraisal.

The lawsuits allow investors who oppose a deal, such as the bitterly contested Dell buyout, to sue and ask a Delaware judge to determine a fair deal price.

Activist investor Carl Icahn urged Dell shareholders to vote down the deal and take their case for fair value to court. Initially appraisal was sought for about 40 million shares, but the bulk was removed for procedural reasons.

In Tuesday's ruling, Vice Chancellor Travis Laster said fair value was $17.62 per share, not the $13.75 per share deal price.

With interest, investors who sought appraisal will collect about $20.84 per share.

The Dell investors presented evidence that fair value was $28.61 per share, which would have cost Michael Dell and Silver Lake hundreds of millions of dollars. The buyers contended that fair value was $12.68.

Dell and a lawyer for the stockholders, Stuart Grant, declined to comment. Tuesday's ruling can be appealed.   Continued...

 
Dell logos are seen at its headquarters in Cyberjaya, outside Kuala Lumpur in this September 4, 2013 file photo. REUTERS/Bazuki Muhammad/Files