Shareholders claim the stock swap was 'billions of dollars below fair value.'

Edward Gately, Senior News Editor

November 17, 2022

2 Min Read
Billion Dollar Bill

Dell Technologies has agreed to a $1 billion settlement to settle an investor lawsuit. It stems from the 2018 stock deal that returned the company to public trading.

The lawsuit was scheduled to go to trial next month in the Delaware Court of Chancery. Dell announced the settlement in a U.S. Securities and Exchange Commission (SEC) filing.

The dispute arose from a $23.9 billion conversion of Dell stock in a 2018 deal. In that transaction, Dell’s controlling investors, including Michael Dell and private equity firm Silver Lake, authorized the payment of cash and issuance of shares of new Class C common stock in exchange for Class V tracking shares. Dell’s Class V stock then stopped trading. And Dell’s Class C common stock began trading on the New York Stock Exchange.

Dell had previously gone private, but created the tracking stock to finance its 2016 acquisition of EMC Technologies. The tracking shares were meant to mirror the value of VMware, a publicly traded entity in which Dell acquired a majority stake via the EMC purchase.

Dell sent us the following statement:

“We were informed that the parties have reached a settlement agreement. An independent special committee of the board has approved the settlement payment by the company. The settlement remains subject to court approval.”

Investors Claim Stock Swap Shortchanged Them

According to Dell’s SEC filing, the plaintiffs claimed the stock swap offered “a transaction value that was allegedly billions of dollars below fair value.”

In the Delaware lawsuit, the Dell shareholders alleged the 2018 swap deal shortchanged them by about $34 per share.

Quinn Emanuel subsequently filed suit in 2019 with co-counsel on behalf of Dell shareholders. It claimed the transaction was not a fair exchange of value.

In 2020, the Court of Chancery rejected a bid to dismiss the suit, paving the way for trial in 2022. In addition, the lawsuit added Goldman Sachs as a defendant.


Quinn Emanuel’s Silpa Maruri

Quinn Emanuel partner Silpa Maruri led the plaintiffs’ legal team along with partner David Cooper.

“Today is a great day for Dell shareholders,” Maruri said. “This settlement underscores a landmark victory, as one of the largest cash settlements in Delaware Chancery Court history on behalf of shareholders. We were ready to bring this case to trial next month and are confident that our strong pre-trial position helped secure this historic settlement for the class.”

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About the Author(s)

Edward Gately

Senior News Editor, Channel Futures

As news editor, Edward Gately covers cybersecurity, new channel programs and program changes, M&A and other IT channel trends. Prior to Informa, he spent 26 years as a newspaper journalist in Texas, Louisiana and Arizona.

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