Dell Appraisals Demanded by T. Rowe to Magnetar Capital

T. Rowe Price Group Inc. and more than 100 other Dell Inc. shareholders who control a combined 47.5 million shares spurned the company’s buyout offer to seek a potentially higher payout through the Delaware court system.

T. Rowe has demanded appraisal on about 30 million shares held in mutual funds and client accounts overseen by the Baltimore-based firm, according to a Nov. 25 legal filing by Dell. Other shareholders who said they may request an independent valuation by the Delaware Chancery Court include Magnetar Capital LLC, an Evanston, Illinois-based hedge-fund firm run by Alec Litowitz; the New York State Common Retirement Fund; and New York-based Loeb King Capital Management. The 47.5 million shares in about 200 shareholder accounts represented 2.7 percent of Dell’s outstanding stock at the time of the buyout.

Founder Michael Dell and private-equity firm Silver Lake Management LLC completed their $24.9 billion buyout of the Round Rock, Texas-based computer company on Oct. 30 after facing months of opposition from investors led by billionaire Carl Icahn and Southeastern Asset Management Inc. Icahn initially said he would demand appraisal rights on about $2 billion of shares he held, only to reverse course last month and accept the offer of $13.75 a share.

Under Delaware law, shareholders who deem a takeover offer too low can petition the chancery court to value their holdings. To exercise this right, shareholders must notify the company that they are demanding appraisal rights prior to a vote on the buyout, and they must refrain from casting their ballot in favor of the transaction.

Changing Course

Shareholders who give notice that they are demanding appraisal rights have 60 days from the completion of the buyout to change their mind and accept the bid. Brian Lewbart, a T. Rowe spokesman, declined to comment on whether the money-management firm would follow through with the appraisal process, which can take several years and cost millions of dollars.

“We are aware of the list of those who plan to exercise appraisal rights and will work within the process” followed by the Delaware courts, David Frink, a Dell spokesman, said in a telephone interview.

In an appraisal, the Delaware court can award an amount higher or lower than the takeover price. Claims are often settled before a ruling.

(Corrects wording in second paragraph to show T. Rowe demanded appraisal.)
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