8-KOther Events

Dell Technologies Inc. 8-K Report, Corporate Update (Nov 16, 2022)

Filed November 16, 2022For Securities:DELL

Summary

Dell Technologies Inc. (DELL) announced on November 15, 2022, that it has reached an agreement to settle a previously disclosed lawsuit. This litigation arose from the company's 2018 Class V transaction, where Dell paid $14.0 billion in cash and issued shares to holders of its Class V common stock. The lawsuit alleged that certain directors and stockholders, including Michael S. Dell and Silver Lake Group, breached their fiduciary duties by offering a transaction value allegedly billions of dollars below fair value to the former Class V stockholders. The proposed settlement requires Dell to pay a total of $1.0 billion, which will cover all plaintiff class costs, expenses, and fees. This settlement amount is expected to be paid by the company and/or its insurers on behalf of the defendants, pursuant to existing indemnification obligations. The settlement is subject to the approval of the Delaware Court of Chancery and the execution of a definitive settlement agreement. If approved, the settlement amount will be recognized in the company's fiscal third quarter results.

Key Highlights

  • 1Dell Technologies has agreed to a $1.0 billion settlement to resolve a class-action lawsuit related to its 2018 Class V transaction.
  • 2The lawsuit alleged fiduciary duty breaches by directors and certain stockholders concerning the valuation of the Class V transaction.
  • 3The settlement amount includes all costs, expenses, and fees for the plaintiff class.
  • 4The settlement payment is expected to be borne by Dell and/or its insurers, based on indemnification obligations.
  • 5A special committee of Dell's board, with independent counsel, has determined that the defendants are entitled to indemnification.
  • 6The settlement is contingent upon final approval by the Delaware Court of Chancery and the execution of a definitive agreement.
  • 7The $1.0 billion settlement will be reflected in Dell's fiscal third quarter financial results.

Frequently Asked Questions

The lawsuit stemmed from Dell's 2018 Class V transaction, where plaintiffs alleged that the transaction's value was significantly below fair value, constituting a breach of fiduciary duties by certain directors and stockholders.

The settlement terms indicate that the $1.0 billion will be paid by Dell Technologies Inc. and/or the company's insurers on behalf of the named defendants, consistent with the company's indemnification obligations.

The $1.0 billion settlement amount will be recognized as a charge in Dell's fiscal third quarter financial results. The exact impact on profitability will depend on the company's reporting for that period.

No, the settlement is not yet final. It is subject to the execution of a definitive settlement agreement containing customary terms and, crucially, the final approval of the Delaware Court of Chancery. If these conditions are not met, litigation will resume.