Dell To Pay $25M To Settle Spat With T. Rowe Price Over 2013 Buyout

Dell will pay T. Rowe Price Group a reported $25 million to settle claims that the Round Rock, Texas-based IT giant shortchanged investors when it was taken private about three years ago.

Thanks to a T. Rowe Price voting foul-up, the settlement is a fraction of the $200 million Dell may have been on the hook for. The $25 million settlement came down Wednesday, according to a Wall Street Journal report.

Dell declined to comment to CRN about the settlement.

[Related: Dell Promises 'Seamless' Deal Registration For Partners On First Day After EMC Merger]

That settlement comes as Dell draws closer to its more than $62 billion acquisition of data storage giant EMC. That transaction is expected to close before the end of October, and Dell has been securing financing and selling off assets to make the deal work.

Dell plans to take on as much as $49.5 billion in debt in order to close the deal, and has a plan to pay down that debt aggressively in the months after the closing.

Michael Pearson, president of DSA Technologies, an Elk Park, Calif.-based Dell solution provider, said that while "$25 million is not a small amount to me personally," he doesn’t consider it "significant" in the scope of the transaction. "It is not a concern at all," he said.

"The larger issue is the debt service that Dell will take on once the EMC transaction is complete," said Stephen Monteros, vice president of business development and strategy at Sigmanet, an Ontario, Calif.-based solution provider that works with both Dell and EMC. "EMC has a good partner program, and we worry that programs and incentives could be slashed to help pay down the debt. I know Dell is sensitive to this, so we just have to see what happens."

In May, a Delaware judge ruled Dell Chairman and CEO Michael Dell and private equity firm Silver Lake Partners had underpaid investors by about $6 billion when they took the company private in 2013 for $13.75 a share, or about $25 billion.

T. Rowe Price, a mutual fund company, opposed the $13.75 a share transaction publicly, but then voted its shares in favor the deal. Voting in favor of the deal disqualified the firm from seeking an "appraisal" in court.

The suit was brought by investment funds about two years ago as a so-called appraisal case. The appraisal strategy allows investors to realize a price increase in a transaction by voting against it and later arguing in court that the deal was worth more than what the buyers paid.

Evanston, Ill.-based hedge fund Magnetar Capital, which also argued in court that Dell and Silver Lake had underpaid investors, was awarded an extra $3.87 a share plus interest, or about $15 million. Dell has an opportunity to appeal that decision.