In my first story for Texas Monthly, almost two years ago, I chronicled the buyout saga at Dell Inc. In that piece, I predicted that Michael Dell would prevail in the management-led buyout, which he did, but not before activist investor Carl Icahn convinced him to put more money in the deal, which he did.
It turns out, though, Icahn may not have gone far enough. This week, a Delaware judge ruled that Michael Dell and his partners shortchanged shareholders by more than $6 billion, according to the Wall Street Journal.
Unfortunately, it’s too late for most of those shareholders. As the Journal notes:
The victory is a hollow one for former Dell investors, few of whom are eligible for compensation due to the intricacies of Delaware law.
All told, the buyers likely will owe a handful of former shareholders who challenged the deal about $35 million, including interest.
It’s one more reminder that management-led buyouts rarely work to investors’ benefit.