US court rules $24.9bn Dell Inc deal underpriced

The $24.9bn buyout of Dell Inc by Michael Dell and Silver Lake Partners in 2013 was underpriced by about 22%, meaning they may have to cough up tens of millions of dollars for investors who opposed it, a Delaware court ruled.

The ruling, by Vice Chancellor Travis Laster, said fair value was $17.62 for each Dell share, well above the actual $13.75 paid, adding that, once interest was included, investors who sought the appraisal would collect about $20.84 a share.

The ruling applies to about 5.5m Dell shares, with Reuters noting that it was a win for the specialised hedge funds that have increasingly tried to squeeze more money from mergers using a type of lawsuit referred to as an appraisal.

This type of lawsuit enables investors who were against a deal to sue and seek a Delaware judge to determine a fair deal price. The suit originally sought appraisal for roughly 40m shares, but most were removed for procedural reasons.

Investors seeking the appraisal argued fair value for the Dell shares was $28.61 each, while the buyers argued fair value was $12.68. The ruling can be appealed.