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The Deal: Icahn Dangles Warrants to Persuade Dell Shareholders

NEW YORK (The Deal) -- Activist investor Carl Icahn has a new offer for Dell (DELL), one that he says is far superior to the $13.65 per share offer from the personal computer maker's founder and private equity firm Silver Lake. The updated pitch comes after Icahn's attempt to sway shareholders away from the leveraged buyout deal was deflated by the recommendation of proxy solicitors in favor of Michael Dell and Silver Lake's offer.

Under the new Icahn deal, the company would self-tender more than 1 billion shares for $14 per share plus a quarter of one warrant each. The warrants would have seven years until their expiration date and a strike price of $20. In his proposal, Icahn said the offer represents value of between $15.50 per share and $18 per share.

Icahn -- who at one point appeared willing to work with the PC maker's founder, were he victorious in his bid -- now looks to bring in new brass, and said he and fellow activist investor Southeastern Asset Management are "completely committed to bringing in management that we expect to be far superior to Michael Dell who we believe has had an abysmal record during the last three years."

Icahn's last-ditch attempt to upset the Dell/Silver Lake bid comes one day after he pushed shareholders to have their stock appraised. Dell's special committee -- which has also been targeted by Icahn for verbal thrashings in his Securities and Exchange Commission filings -- called his statements "misleading."

Much of Icahn's attempts to thwart the Dell LBO offer appear to be driven by his jockeying for a higher share price.

Dell's special committee, at first, had said his offer was incomplete, which meant the corporate raider had to post more than $3 billion of his own capital in debt financing to support the transaction.

Still, Icahn -- as recently as mid-June -- called upon Michael Dell to increase his offer to acquire the company to $14 per share. (The LBO group has already raised its price once.)

Icahn has several Dell investors, including Highfields Capital Management, Yacktman Asset Management and Pzena Investment Management, lined up in opposition to the bid, but Icahn took a big blow this week when proxy firms Institutional Shareholder Services Inc., Glass, Lewis & Co. and Egan-Jones all voiced approval of the $13.65 per share bid from Silver Lake and Michael Dell.

Votes for the deal will be tallied in less than a week, on the morning of July 18.

-- Written by Jonathan Marino

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