Dell Technologies Inc said on Wednesday that it had reached a $1 billion settlement in a lawsuit accusing it of short-changing some shareholders in a contentious $23.9 billion transaction in 2018 that marked the company’s return to the public market.
A Delaware Chancery Court judge must approve the all-cash settlement, which will be reflected in Dell’s third-quarter results.
It settles claims against the Round Rock, Texas-based computing and technology services firm and its controlling shareholders, which include billionaire CEO Michael Dell and private equity firm Silver Lake.
The agreement appeared to be the largest cash class-action settlement in a Delaware state court, according to Silpa Maruri, a partner at Quinn Emanuel Urquhart & Sullivan who represents the plaintiffs.
The contested December 2018 transaction involved a stock swap involving Dell’s stake in software maker VMware.
In exchange for the outstanding Class V shares that tracked VMware’s publicly traded stock, Dell paid $14 billion in cash and issued 149.4 million Class C shares.
Holders of Class V shares sought $10.7 billion in damages, claiming their stock was worth far more than Dell paid for it, whereas Michael Dell and Silver Lake claimed the Class C stock was worth far less.
The trial was supposed to start next month.
The agreement also resolves claims against Goldman Sachs Group Inc, which advised Dell on the transaction and was due a fee of $70 million. Insurance companies may pay a portion of the settlement amount.
Maruri described the settlement as a “great result for shareholders,” citing the risks of a trial.
“This settlement demonstrates the importance of respecting the rights of minority shareholders in corporations,” she said.
According to Forbes magazine, Michael Dell was worth $52 billion on Tuesday.