Dell Technologies reaches a $1 billion settlement in a stock swap lawsuit
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Dell Technologies has said that it has reached a $1 billion settlement in a 2018 lawsuit. The amount has been used to settle a lawsuit that accused the technology company of short-changing some shareholders in a $23.9 billion transaction in 2018 as the company transitioned back to being a publicly traded entity.
Dell pats $1 billion in lawsuit settlement
The $1 billion settlement paid by Dell was paid in all cash. The settlement is set to be approved by a Delaware Chancery Court Judge. This settlement will appear in the third-quarter financial results of the technology company.
The settlement will resolve claims facing Round Rock, a Texas computing and technology service company. The lawsuit also involved the company’s controlling shareholders and the company’s chief executive, Michael Dell, and the Silver Lake private equity company.
The lawsuit’s plaintiffs are represented by Silpa Maruri, a partner at Quinn Emanuel Urquhart & Sullivan. Maruri said that the accord seemed to be the largest cash class-action settlement that has been made in Delaware state court.
The lawsuit involves a 2018 transaction
The transaction in dispute happened in December 2018. This transaction involved a stock swap related to the interest of Dell in VMware, a software maker firm. At the time, Dell paid $14 billion in cash and issued another 149.4 million Class C shares in exchange for the outstanding Class V shares. These shares tracked the publicly traded stock of VMware.
Those holding the Class V shares seek to be paid $10.7 billion in damages, claiming that their stock was worth more than Dell was paying. On the other hand, the Class C stock was also worth less than what was claimed by Silver Lake and Michael Dell.
A trial for this lawsuit was slated to start in the coming month. The settlement in question will also resolve claims facing Goldman Sachs. The investment bank offered financial advice to Dell on this transaction. The bank was slated to receive $70 million as a fee for this transaction. Insurers would pay part of the settlement fee.
According to Maruri, this settlement is good news for the shareholders, adding that there were risks if the lawsuit went to trial. She also said that the lawsuit demonstrated that the rights of the minority shareholders in a company needed to be respected.