Dell Technologies Inc. has agreed to settle a lawsuit for $1 billion that alleged the company defrauded some shareholders in a $23.9 billion deal in 2018. The settlement must be approved by a Delaware Chancery Court judge before it can be included in Dell’s third-quarter earnings. The settlement settles claims against Dell and its majority shareholders, including CEO Michael Dell and private equity firm Silver Lake.
The contested stock transfer relating to Dell’s ownership of software manufacturer VMware was part of the December 2018 deal. Dell paid $14 billion in cash and issued 149.4 million Class C shares. 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.
The settlement is 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. Insurance companies may contribute to the settlement sum. 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.
The settlement proves that minority shareholders’ rights in corporations must be honored, according to Maruri. Michael Dell’s net worth reached $52 billion on Tuesday, according to Forbes.
