T. Rowe Price and Dell Reach Settlement Over 2013 Dell Buyout

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T. Rowe Price Group and Dell have reached a settlement over the computer giant’s $25 billion buyout, a deal the Baltimore money management firm opposed but voted in favor of in an embarrassing and unusual technical mix-up.

The settlement resolves a lawsuit in which T. Rowe and other investors argued that Dell founder Michael Dell undervalued the company in his bid to take it private in 2013. A Delaware judge ruled in May that Dell underpaid by about $6 billion, but also found that T. Rowe Price — and therefore the investors in its fund — was ineligible to cash in because it had voted in favor of the deal, albeit unintentionally.

T. Rowe, one of Dell’s largest shareholders, had vocally opposed the Dell buyout and initially voted against it. But when the deal was renegotiated, the company’s automated system that tells shareholders how to vote defaulted to a “yes” vote, according to court records. Company officials have acknowledged that they failed to manually change the settings to reflect that a “no” vote should be cast.

The mistake cost T. Rowe fund investors about $200 million, analysts estimate — the amount they would have been owed had T. Rowe been allowed to participate in the lawsuit against Dell.

In an effort to make right with clients, T. Rowe announced in June it would pay out $194 million to the investment funds that had held Dell shares. Analysts said the move helped it avoid a class-action lawsuit from angry fund investors.

A T. Rowe spokesman would not say how much the settlement is worth or discuss its terms, but The Wall Street Journal on Wednesday reported Dell agreed to pay $25 million to T. Rowe, citing “sources familiar with the deal.” As a condition of the settlement, T. Rowe will not appeal the judge’s decision, according to the report.

The spokesman would neither confirm nor deny those details.

Source: www.baltimoresun.com www.baltimoresun.com

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