In a filing with the U.S. Securities and Exchange Commission (SEC), Dell Technologies Inc., along with co-defendants Silver Lake Group and Goldman Sachs, says it has reached a $1 billion settlement of a lawsuit accusing it of short-changing some shareholders in a controversial $23.9 billion transaction in December 2018 that marked its return as a publicly traded company.
The plaintiffs have agreed to dismissal of all claims. A trial had been scheduled to begin in December.
The disputed December 2018 transaction involved a stock swap related to Dell's interest in software maker VMware. Dell had paid $14 billion in cash and issued 149.4 million Class C shares in exchange for outstanding Class V shares tracking VMware's publicly traded stock.
The $1 billion settlement will include all costs, expenses, and fees of the plaintiff class relating to the action and its resolution. The settlement also resolves claims against Goldman Sachs, which advised Dell on the transaction and was to receive $70 million in fees. The amount will be paid by Dell and/or Dell’s insurers.
Representing the plaintiffs, Silpa Maruri, a partner at Quinn Emanuel Urquhart & Sullivan, said the deal appeared to be the largest ever cash class-action settlement in a Delaware state court.
Citing the risks of going to trial, Maruri called the settlement a "great result for shareholders," even though holders of the Class V shares sought $10.7 billion in damages, saying their stock was worth far more than Dell paid for it, while the Class C stock was worth far less than Michael Dell and Silver Lake claimed.
"This settlement demonstrates that the rights of minority shareholders in companies need to be respected," Maruri said.
For its part, Dell said proceedings in the action will continue if the court decides not to grant final approval of the settlement and all of its material terms, or if the settlement does not otherwise become final or effective.
The settlement will be reflected in Dell's third-quarter results and is subject to approval by a Delaware Chancery Court judge.