Newspaper article International Herald Tribune

Icahn Lost the War but Is Still Battling Dell

Newspaper article International Herald Tribune

Icahn Lost the War but Is Still Battling Dell

Article excerpt

Carl C. Icahn says he will seek appraisal rights in the Delaware courts, a legal maneuver that lets a judge decide how much Dell shares are worth.

Carl C. Icahn may have given up his campaign to block Dell from going private in a vote on Thursday. But the activist investor still has a good shot at another goal: getting more for his shares than the company's founder, Michael S. Dell, wants to pay.

Mr. Icahn says he will seek appraisal rights in the Delaware courts, a legal maneuver that lets a judge decide how much Dell shares are really worth. And growing evidence indicates that Mr. Icahn stands a good chance of coming out ahead by doing so.

In theory, seeking appraisal rights is a risky move -- the judge could decide that Dell shares are, fundamentally, worth less than the $13.75 each that Mr. Dell and the investment firm Silver Lake Partners are offering. Then Mr. Icahn would be stuck with that lower price.

But a new analysis from lawyers at Fish & Richardson suggests that it's unlikely. In the last 20 years, Delaware courts have rarely settled on a value lower than the transaction price -- and never in a deal like the one Dell is contemplating. The findings echo those of at least two other analyses of appraisal rights cases.

The latest analysis, which is planned for publication in Law360 on Wednesday, was carried out at the request of the Dell Valuation Trust, a fledgling effort to coordinate investors seeking appraisal rights in the Dell transaction. The trust is being organized by the Shareholder Forum, an organization run by a former investment banker, Gary Lutin, that seeks to inform investors.

The Fish & Richardson analysis found that, in 45 appraisal- rights cases in the past two decades, the courts have set a "fair value" below the corresponding transaction price for just eight deals, or about 18 percent of the time.

None of those eight outliers were "standalone" buyouts, in which the company was being bought for its own sake, rather than, say, in order to fold it into another, similar company. Among standalone buyouts, the courts set share values anywhere from 3.5 percent over the deal price to more than double the deal price. …

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