Dell Wins Reversal of Ruling That Company Undervalued in Buyout

Photo by Jack Plunkett/Bloomberg News.

A ruling concluding that Dell Inc.’s 2013 management-led buyout undervalued the company deserves a second look, Delaware’s highest court said.

The Delaware Supreme Court today partially reversed a chancery court decision that Dell’s “fair value” was $17.62 per share. That’s about 28 percent more than the $13.75 per share (for a total value of $25 billion) that Dell founder Michael Dell and private equity firm Silver Lake Partners paid for the company in October 2013.

The chancery court properly considered all the relevant factors, including Dell’s deal price, the state high court said. However, the lower court erred in its ruling because “its reasons for giving that data no weight—and for relying instead exclusively on its own discounted cash flow (‘DCF’) analysis to reach a fair value calculation of $17.62—do not follow from the court’s key factual findings and from relevant, accepted financial principles.”

The case is Dell, Inc. v. Magnetar Glob. Event Driven Master Fund Ltd., 2017 BL 447089, Del., No. 565, 2016, 12/14/17.