$24.9 billion Dell buyout was underpriced, court rules

A U.S. court has now ruled that Dell's 2013 $24.9 billion buyout by founder Michael Dell and Silver Lake Partners was underpriced. Specifically, the Delaware court ruled that the deal was underpriced by 22%.

From Reuters:

Michael Dell and Silver Lake Partners underpriced their 2013 $24.9 billion buyout of Dell Inc [DI.UL] 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 terms of the original deal specified that the buyout would fetch $13.75 per share for shareholders. However, today's ruling established that fair value was $17.62 per share, and buyers will end up shelling out around $36 million more as a result. Today's ruling can be appealed.

Dan Thorp-Lancaster is the former Editor-in-Chief of Windows Central. He began working with Windows Central, Android Central, and iMore as a news writer in 2014 and is obsessed with tech of all sorts. You can follow Dan on Twitter @DthorpL and Instagram @heyitsdtl

  • wat
  • All your base are belong to us.
  • 24.9 B only?!  I would've paid 25!
  • Lol
  • I would have paid tens of dollars.
  • I would have requested to take over the company for free! Posted via Surface Pro 4 or Microsoft Halo Phone
  • Not that this site ever delves into enterprise stuff - though it should from time to time - but I wonder if this will affect the closing of the EMC buyout...
  • Probably not. An extra $36M on a $24.9B sale is peanuts. 
  • Exactly what I was thinking...especially when you spread it out over 5.5 Million shares, lawyer fees, a bit of inflation, etc. It's laughable really.
  • Another bites the dust :( How many jobs loses will this create?
  • If you can afford 24.9 billion in the first place, a few million now is like the change in the ash tray for these mega wealthies.
  • I used to play this game called Make it Rain: For they love of money". As you gain more and more money you eventually realize it's never enough. It becomes a chase for more and what seemed like a lot (1 million) no longer amasses quickly enough. Eventually the zeroes cease to matter and you are spending $40 billion as if it were $40 dollars.
  • A US court (?) in Deleware has to be much smarter about what something is worth (retroactively), right? Who brought the suit? - Oh, a group of hedge funds. A group of aggreived bankers found some sympathy for a change :). 
  • Once Hitlary gets in office this kind of shenanigans will stop.
  • You are the dumbest commenter ever. You realise how corrupt hillary is right? Oh i guess not.. Dumbass
  • He called her Hitlery. I think that you completely missed the sarcasm...
  • This is dumb. What is sells for is what it's worth. If I have a truck "worth" 10,000 but it won't sell at that price then it isn't worth 10,000. Consumers determine how much things are worth, not a stupid court.
  • Re: wp8-1,
    It sounds like the situation was far more complex than an unrelated buyer and seller negotiating. It was a publicly traded company. Now it is privately owned. It sounds like maybe, the minority share holders, who opposed the sale, were forced to sell (at a price determined by the majority shareholders) when the majority share holders voted to take the public company, private. The former majority share holders, of the publicly traded company, now own the private company.
    Something along those lines. Clarify, anyone?
  • Correct, to stick with the truck analogy it was like you had a truck you felt was worth $10000 that you shared with 4 other guys from work. Well, the truck isn't doing as well as it was before so one of your buddies says he wants to just buy it from all of you. That's fine as you have another car anyway, but then he says he is paying the group $8000 for it. You say that isnt what it is worth and all your buddies say it is (because he is forgiving some of their poker debts from last Saturday, unbeknownst to you). You still OK with the $8000 value? Didn't think so. It isnt like there is a Kelly Blue Book for company buyouts....
  • You need to be a damn teacher! That was the best explanation using his analogy I've ever had the privilege to read.
  • Well said
  • Wrong Micheal Dell turned his company around because his name branded on all the computers the company was dumping the masses were garbage. He didn't want to leave a legacy of failure and turned it around
  • Exactly. Having said that the money he has made since returning to the company will easily pay this amount.
  • Greedy sobs.the founder should've let them rot, then bail them out for much lower price.
  • I don't know if michael dell would have done that seeing as his name is on the wall. Its easier to take a medium brand and bump it up than take a brand with bad reputation and fix it even if you save millions.
  • Even if they lose, that's still a good deal.  Only having to pay 36M for a 22% undervaluation of 24.9B.  That's a saving of 5.4B.  I'm sure Michael is devastated.
  • Not particularly thrilled with the direction their taking AW. & what happened to that consumer router they were building. They now have the know-how to do it(sonicwall although overkill for consumers)
  • 24.9 billion is a lot of bloatware!