DELL Shareholders $1B Settlement

On November 16, 2022, Dell Technologies Inc. said that it has agreed to pay a $1 billion settlement over a lawsuit that accused it of shortchanging some shareholders when it returned to the public markets in 2018.

Investors who recorded holders or beneficial owners of Dell Technologies Inc. Class V common stock (NYSE: DVMT) whose shares of Class V Common stock were converted on December 28, 2018. may be entitled to payouts.

• The announced agreement looks to resolve investors’ allegations that they were short-changed billions of dollars for their Class V stock in connection with a 2018 transaction that turned Dell into a public company. The settlement comes as the shareholder lawsuit alleging various breaches of fiduciary duties against Michael Dell, Silver Lake, and others were set to go to trial next month in the Delaware Court of Chancery.

• In the asserted transaction valued at $24 billion, Dell’s controlling shareholders – Michael Dell, Egon Durban, and the private equity firm Silver Lake – allegedly expropriated $10.7 billion from public Class V shareholders by forcing them to convert their shares into cash or privately held shares of Class C common stock at an unfair price. Class V stock was a publicly traded “tracking stock” that tracked the performance of VMware, Inc.’s publicly traded shares. However, the class action complaint alleges the purported $120 per share consideration fell well below the market price of the VMware stock that the Class V stock was intended to track.

• The alleged multi-billion-dollar windfall Dell’s controllers received at the expense of shareholders was further compounded by the “egregious” overvaluation of privately held Dell C shares – internally valued at $6 billion less than what Dell claimed – according to investors.