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Dell $25bn buyout was underpriced, judge rules | Dell $25bn buyout was underpriced, judge rules |
(about 7 hours later) | |
A US court has ruled that the buyout of Dell by its founder Michael Dell and investment firm Silver Lake Partners was underpriced by 28%. | A US court has ruled that the buyout of Dell by its founder Michael Dell and investment firm Silver Lake Partners was underpriced by 28%. |
The ruling is a win for investors who rejected the $24.9bn (£17.2bn) deal in 2013. | The ruling is a win for investors who rejected the $24.9bn (£17.2bn) deal in 2013. |
Encouraged by activist investor Carl Icahn, dissatisfied investors asked the court to rule on a fair value. | |
Fair value cases allow judges to look at the circumstances at the time of a deal and make an appraisal. | Fair value cases allow judges to look at the circumstances at the time of a deal and make an appraisal. |
The decision applies to 5.5 million shares whose owners did not support the original deal. | The decision applies to 5.5 million shares whose owners did not support the original deal. |
The shareholders originally contended the company was worth $28.61 a share and that the buyers had taken advantage of a fall in the computer company's share price. | The shareholders originally contended the company was worth $28.61 a share and that the buyers had taken advantage of a fall in the computer company's share price. |
Mr Dell and Silver Lake argued the company was worth $12.68 a share and that they had paid a premium at $13.75 a share. | Mr Dell and Silver Lake argued the company was worth $12.68 a share and that they had paid a premium at $13.75 a share. |
The judge ruled the company's stock was $17.62 a share at the time of the deal. | The judge ruled the company's stock was $17.62 a share at the time of the deal. |
However, the decision made clear that the court did not believe the buyers had intentionally underpriced their offer. | However, the decision made clear that the court did not believe the buyers had intentionally underpriced their offer. |
In 2013 Mr Dell joined forces with Silver Lake to take private the company he founded in a move he said would allow Dell to focus on the needs of customers. | In 2013 Mr Dell joined forces with Silver Lake to take private the company he founded in a move he said would allow Dell to focus on the needs of customers. |
That had been contentious from the start, with investors, including Mr Icahn, arguing it was worth more. | |
Once it was clear the deal would close, Mr Icahn sent a letter to other investors acknowledging that they had lost, but saying he would continue to seek a higher valuation for Dell. | |
"We have come to the conclusion that we will not pursue additional efforts to defeat the Michael Dell/Silver Lake proposal, although we still oppose it and will move to seek appraisal rights," he wrote. | "We have come to the conclusion that we will not pursue additional efforts to defeat the Michael Dell/Silver Lake proposal, although we still oppose it and will move to seek appraisal rights," he wrote. |
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