In a letter to Dell on Thursday, Icahn indicated he's ready to start a proxy battle between Dell and many of its shareholders, who increasingly are in opposition to the $13.65 a share takeover offer.
Icahn said his holding company, Icahn Enterprises, is willing to commit $2 billion to a bridge loan to finance the $9 a share special dividend he's recommending for Dell. The billionaire activist said he's willing to commit a further $3.25 billion in financing for the dividend.
"Rather than engage in the Going Private Transaction, we propose that Dell announce that in the event that the Going Private Transaction is voted down by shareholders, Dell will immediately declare and pay a special dividend of $9 per share," wrote Icahn, in his letter.
The dividend would be Dell's cash on hand, new financing arrangements or the use of accounts receivable from the company's financing arm.
A special committee of independent directors set up to weigh the company's options defended a continued pursuit of a buyout in a statement on Wednesday.
"The Special Committee unanimously determined that the sale of the Company would be the best alternative for stockholders," it said. "We negotiated aggressively to ensure that stockholders received the best possible value and agreed to a $13.65 per share transaction that provides value certainty at a 37% premium above the average price for the 90 days before rumors regarding the transaction surfaced."
Dell shores rose 1.02% to $14.31 during Monday morning trading.
-- Written by Antoine Gara in New York