Last week, Icahn and Southeastern Asset Management Inc offered $12 in cash per share or additional shares to existing investors as an alternative to Michael Dell's $24.4 billion bid to take the company private. And the billionaire investor warned he would put up his own roster of candidates for the board if shareholders greenlit the company founder's offer.
Icahn's plan assumes that only as much as 80 percent of the company's shareholding will opt for a cash payout, translating into a maximum outlay of $16.8 billion.
Michael Dell, major shareholders such as Southeastern and Icahn are waging a battle over the future of the world's third largest personal computer maker, once a tech-industry high flyer, but now struggling to evolve as people embrace smartphones and tablet computers.
Michael Dell and private equity firm Silver Lake want to take the company private for $13.65 per share, but stockholders, including Southeastern and T. Rowe Price Group Inc, have complained that offer severely undervalues the company.
Instead, Icahn and Southeastern, two of Dell's biggest investors, proposed to give stockholders $12 cash for every share they own, as well as allow them to keep their stock.
Shareholders last week welcomed the alternative proposal, which they said sustained a discussion around Dell's future. But investors might find the latest option on the table unpalatable because of a lack of specifics, some analysts say.
"Most shareholders would prefer the certainty of $13.65 in cash rather than risk the uncertainty and the ensuing stock volatility," Jefferies & Co analyst Peter Misek wrote in a Monday research note. "Our estimates point to possible minimal upside ... to the $13.65 Silver Lake offer, which we do not think would warrant the potential volatility."
Icahn is being advised by investment bank Jefferies Group.
In a letter to Icahn, the committee said it was not clear if he intended to make "an actual acquisition proposal that the Board could evaluate," or if he intended his offer as an alternative in the event the pending sale to Silver Lake and Michael Dell is not approved.
Dell shares were down about 0.2 percent at $13.48 at midday.
Icahn and Southeastern's challenge comes after Blackstone ended its pursuit of Dell in April and pulled out a month after it teamed up with Icahn to challenge the take-private attempt.
Icahn argued in a letter sent to the board and made public in a filing on Friday that Dell operates a large enterprise-focused computing business in addition to its ailing PC division, with strong ties Microsoft Corp and Intel Corp.
Without specifying details, he also said cost savings could be had from merging assembly plants across the world, while there remained opportunities to spin off non-core businesses.
Apart from asking who would make up the company's senior management team under Icahn, the committee said in its Monday letter that they wanted to know his "strategy and operating plan."
The committee also asked for information on the terms of the debt financing required for Icahn's proposal and "contingencies available if cash on hand or stockholder rollovers are less than anticipated," as well as financing commitment letters.
It said the proposal did not seem to take into account the additional borrowing required if Icahn uses the company's cash in the transaction and reduces future cash flow by selling accounts receivables. In addition, it asked for an analysis of whether the receipt of additional shares would be taxable.
It also wanted to know more about the relationship between Icahn and Southeastern.
Icahn was not available for comment.
Both Icahn and Southeastern said they would finance the proposal from existing cash and about $5.2 billion in new debt.
Icahn and Southeastern together hold about 13 percent of Dell stock. The billionaire investor previously proposed paying $15 per share for 58 percent of Dell.
(Reporting by Poornima Gupta, Sinead Carew and Nicola Leske; Editing by Lisa Von Ahn and Andre Grenon)