Perot Shareholders Want Perot-Dell Acquisition Stopped

The suit, filed Oct. 5 in the Dallas County, Texas District Court on behalf of the Booth Family Trust, seeks to block the sale because the trust believes Perot Systems did not explore all possible buyers. It alleges that Dell's offer of $30 per share, for a total of about $3.9 billion, or about 68 percent higher than Perot shares were trading for at the time of the announcement, is unfair.

Named as defendants in the case are Perot Systems, Dell and Perot board members Ross Perot, Ross Perot Jr., Peter Altabef, Steven Blasnik, John S.T. Gallagher, Carl Hahn, DeSoto Jordan, Caroline Mathews, Thomas Meurer, Cecil H. Moore Jr., Anthony Principi and Anuroop Singh.

"The proposed merger with Dell is the result of a hopelessly flawed process. Namely, the individual defendants failed to conduct a market-check for other potential strategic and financial buyers prior to signing the merger agreement with Dell," according to the lawsuit.

The companies' top two executives, Michael Dell, Dell's chairman and CEO, and Perot Chairman Ross Perot Jr., first met on July 20 to discuss an acquisition. After that meeting, Perot Jr. requested a meeting with Dell board member Thomas W. Luce III to discuss the potential value of Perot.

According to the suit, Luce has a longstanding relationship with Perot Jr. and other Perot executives. Over the next six weeks, Perot Jr. and Luce held several discussions about a potential sale, rather than form a special committee of independent directors to negotiate and evaluate an offer, according to the suit.

"Surprisingly, in a move that essentially capped the offer price that the company would receive, Perot Jr. advised that he would need for Dell to offer $30 per share," according to the suit.

According to the suit, the defendants did not explain why they proceeded into the agreement with Dell without investigating other possible offers.

The suit also alleges that the defendants bound Perot to a strict provision that granted Dell the right to match any other offer and agreed to a $130 million termination fee, "thereby creating impermissible obstacles to higher competing bids and locking up the merger in favor of Dell."

"As a result of defendants' conduct, Perot's public stockholders have been and will continue to be denied the fair process and arm's-length negotiated terms to which they are entitled in a sale of their company," according to the suit. "In order to meet their fiduciary duties, the Individual Defendants are obligated to explore transactions that will maximize shareholder value, not structure a preferential deal for themselves."

Executives from Dell declined to comment on the lawsuit and executives from Perot Systems could not be reached for comment.