## Facts

- Dell, Inc. was a public company whose founder and CEO, Michael Dell, partnered with Silver Lake in a 2013 management-led leveraged buyout to take Dell private for $13.75 per share in cash plus a $0.13 special dividend.
- The transaction price reflected a premium to Dell’s unaffected trading price, against the backdrop of industry headwinds and a depressed stock price.
- A special committee oversaw the process, which included pre-signing outreach to financial sponsors, negotiation-driven price increases, and a 45-day go-shop.
- During the go-shop, advisors contacted 67 potential bidders; several parties conducted diligence and proposed alternatives, including Blackstone and Carl Icahn.
- Michael Dell agreed to support any superior proposal by voting his shares (about 15%) in the same proportion as unaffiliated shares, reducing concerns that management support was locked up.
- Former stockholders (including Magnetar funds) perfected appraisal rights under 8 Del. C. § 262 and sought a judicial determination of “fair value.”

## Issues

1. Whether the Court of Chancery abused its discretion in an appraisal action by assigning zero weight to Dell’s unaffected market trading price and the merger deal price and relying exclusively on the court’s own DCF valuation.
2. Under what circumstances a negotiated deal price in an arm’s-length public-company merger, including an MBO, should receive heavy weight as evidence of fair value in appraisal.

## Decision

- The Delaware Supreme Court reversed the Court of Chancery’s $17.62 per share fair-value determination and remanded.
- The court held it was error to give no weight to market-based indicators (trading price and deal price) where the record supported an efficient market and a robust, informed, and competitive sale process.
- The court reaffirmed there is no formal presumption that deal price equals fair value, but concluded the deal price here deserved heavy, potentially dispositive, weight (subject to appropriate treatment of merger-specific value).
- The court directed the Court of Chancery to reconsider fair value consistently with the requirement to meaningfully weigh reliable market evidence.

## Legal Principles

- In appraisal under 8 Del. C. § 262, the court must consider all relevant factors; it may not disregard market-based valuation evidence without coherent, record-based reasons grounded in accepted financial principles.
- When a public company’s stock trades in an efficient market, the unaffected trading price is a relevant indicator of fair value and may serve as a proxy absent persuasive proof of market failure.
- When the sale process is robust and free of disabling conflicts—open to competition, informed, and meaningfully tested—the negotiated deal price is strong evidence of fair value and will often warrant heavy, sometimes dispositive, weight.
- Generic skepticism about MBOs (e.g., “winner’s curse” or management informational advantages) cannot justify rejecting deal price where case-specific protections and process features mitigate those concerns.
- Bids by financial sponsors cannot be categorically discounted on the theory that return targets necessarily imply underpayment; competitive bidding among such buyers can reflect risk-adjusted market valuations.
- Courts should be cautious about exclusive reliance on litigation-driven DCF models, especially where projections are uncertain and market evidence is reliable.

## Conclusion

The Delaware Supreme Court required the appraisal court to give meaningful weight to Dell’s market trading price and merger deal price, holding that a well-run, competitive process in an efficient market generally makes market-based indicators the most reliable evidence of fair value, even in an MBO, and that departing from them demands compelling, record-supported reasons.


Dell, Inc. v. Magnetar Glob. Event Driven Master Fund Ltd., 177 A.3d 1 (Del. 2017)