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Dell's High Stakes Billionaire Battle Goes Into Overtime

Carl Icahn may have played a strong hand in recent days, Shah of Albert Fried said. Still, the adjournment likely plays into the hands of the Silver Lake consortium.

The billionaire activist may have helped to drive a significant amount of crucial abstaining shareholders by holding out the prospect of an appraisal on the Silver Lake offer in a Delaware court. Meanwhile, the activist's last minute sweeteners to a $14 a share self-tender for about 72% of Dell's shares may have won support from some institutional investors.

Earlier in July, Icahn said he would add a warrant to his tender offer for the majority shares. The warrant, which Icahn says is worth up to $4 a share to current investors, will give Dell shareholders the right to buy one Dell share within the next seven years for, for every four shares they tender to his offer.

Since Michael Dell and Silver Lake unveiled their takeover proposal on February 5, most news broke in the favor of the buyout consortium.

Dell and a special committee tasked with finding higher bidders for the company both support the $13.65 a share takeover transaction and continue to see weakness in the financial strength and value of Icahn's offer.

Meanwhile, after Icahn cobbled together $5.2 billion in financing from his own pocket, investment bank Jefferies and a coterie of debt market investors, prominent proxy advisory firm Institutional Shareholder Service recommended investors accept the Michael Dell and Silver Lake offer.

I.S.S., however, didn't analyze Icahn's competing proposal given that the activist only seeks to acquire about 72% of Dell's outstanding shares. Dell's special committee continues to characterize Icahn's financing as conditional.

For his part, Icahn has rejected the analysis of I.S.S. and Dell's board. He says the buyout consortium is using scare tactics to get shareholders to back their offer and insists Dell's declining PC business and its enterprise software assets are worth far more than $13.65 a share.

Dell shares were up over 2% in early trading Thursday, to $13.19.

-- Written by Antoine Gara in New York

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