An investor, who held shares of Dell Technologies Inc. (DVMT) Class V shares, filed a lawsuit against Michael Dell, Silver Lake Group LLC and others over alleged breaches of fiduciary duties.
According to the complaint the plaintiff alleges that the proposed transaction is unfair and a coerced transfer of at least $10 billion in value away from Dell’s Class V stockholders and to Michael Dell and Silver Lake Group LLC. The plaintiff claims that Michael Dell and Silver Lake are unfairly stripping value from Class V (NYSE: DVMT) stockholders and converting it to themselves.
The Class V Common Stock is a publicly traded tracking stock that represents an economic interest in the fast-growing VMware, Inc. and was intended to track approximately one shares of VMware, Inc. However, the plaintiff claims that the ongoing threats by Michael Dell and Silver Lake Group LLc to engage in the very misconduct they are now enacting, the Class V stock currently traded at a steep discount, approximately 35%, to the VMware common stock that provides the underlying economic value of the Class V stock.
The plaintiff says that Michael Dell and Silver Lake Group LLC have succeeded in destroying the tracking feature of the Class V Common Stock and as a result of their misconduct, the Class V Common Stock value no longer tracks the economic prospects of a share of highgrowth attractive VMware common stock as it was designed to do.
The plaintiff claims that because Michael Dell and Silver Lake Group LLC have threatened to punish the Class V stockholders by abusing a forced conversion provision through which Michael Dell and Silver Lake Group LLC can convert Class V stock into Class C stock following an IPO, Class V now “tracks” a mess of unappealing confusion.
IN order to achieve their goals, the plaintiff alleges that Michael Dell and Silver Lake Group LLC fabricated the purported value of the untraded Class C Common Stock, ignoring Dell’s own internal valuation of $33.17 per share in December 2017 and inflating it to the ridiculous $80 per share needed to even arguably justify this deal in July 2018, while at the same time, Michael Dell’s heavy-handedness and private and public threats as a controller increased the divergence between the trading prices of Class V and ordinary VMware common stock. The plaintiff says that this manufactured discount alone accounts for approximately $10 billion, nearly 80% of which Michael Dell and Silver Lake Group LLC will capture.
Those who held shares of Dell Technologies Inc. (DVMT) and elected to receive Dell Class C shares, you have certain options and you should contact the Shareholders Foundation, Inc.