Dell Technologies Inc. announced on Wednesday that a lawsuit accusing it of defrauding some shareholders in a contentious $23.9 billion deal in 2018 that marked the company’s return to the public markets had been settled for $1 billion.
A Delaware Chancery Court judge must approve the all-cash settlement before it can be included in Dell’s third-quarter earnings.
It settles claims made against the computing and technology services corporation located in Round Rock, Texas, and its majority shareholders, including billionaire CEO Michael Dell and private equity firm Silver Lake.
The agreement seems to be the largest cash class-action settlement in a Delaware state court, according to Silpa Maruri, a partner at Quinn Emanuel Urquhart & Sullivan who is representing the plaintiffs.
The contested stock transfer relating to Dell’s ownership of software manufacturer VMware was part of the December 2018 deal. For the existing Class V shares, which tracked VMware’s publicly listed equity, Dell paid $14 billion in cash and issued 149.4 million Class C shares.
While the Class C stock was worth much less than Michael Dell and Silver Lake claimed, the holders of the Class V shares sought $10.7 billion in damages, claiming their stock was worth much more than Dell paid for it.
A trial was slated to start the following month. The agreement also settles complaints made against Goldman Sachs Group Inc., which provided advice to Dell on the deal and was due a $70 million fee. Insurance companies may contribute to the settlement sum.
Maruri cited the dangers of going to trial when he referred to the settlement as a “wonderful result for shareholders.” This agreement proves that minority shareholders’ rights in corporations must be honoured, she added.
Tuesday saw Michael Dell’s nett worth reach $52 billion, according to Forbes.