Billionaire investor Carl Icahn promised Dell Inc shareholders that the company would buy back up to $16 billion of stock if they join his campaign to stop the computer maker from going private.
Next month, the company's shareholders will vote on whether to accept a $24.4-billion bid from the company's founder, Michael Dell, and private equity firm Silver Lake, and so far shareholders' reaction to two of Icahn's proposals has been mixed.
Icahn has said that Michael Dell's bid undervalues the company. In an open letter on Tuesday, Icahn gave his proposal to shareholders, asking them to vote in new directors who would in turn approve Dell buying back stock at $14 a share. Dell and Silver Lake are bidding $13.65 a share.
Southeastern, which had been the firm's largest independent shareholders, sold nearly $1 billion of its Dell shares to Icahn at $13.52 apiece, making him the company's largest external investor
Southeastern and Icahn, which together hold about 13% of Dell's shares, had agreed not to sell their shares in the tender offer, Icahn wrote in his letter.
Dell could fund a tender offer with $5.2 billion of debt financing, $7.5 billion in cash available at Dell and $2.9 billion available through a sale of Dell receivables, leaving $4.9 billion of cash available for ongoing Dell operations.
Dell's special board committee, which is looking at offers for Dell, said it was reviewing the latest "concept put forth".
"There is neither financing, nor any commitment from any party to participate, nor any remedy for the firm and its shareholders if the transaction is not consummated," the board said.