He says the amount being offered by a group led by Dell founder and chief executive Michael Dell substantially undervalues the slumping PC maker.
Icahn wrote in a March 5 letter to Dell directors that the Round Rock, Texas, company should chose his alternative, which would involve a special dividend totaling $9 per share, if shareholders reject the buyout plan that was announced last month.
If the board declines to promise that, Icahn said, the company should combine a shareholder vote on the buyout with its annual meeting to elect new directors, for which he will nominate a slate of candidates.
"If you fail to agree promptly to combine the vote on [the buyout] with the vote on the annual meeting, we anticipate years of litigation will follow challenging the transaction and the actions of those directors that participated in it," said Icahn, who joins other major shareholders in opposing the buyout plan.
Michael Dell, backed by other investors led by investment firm Silver Lake, is trying to buy out the company for $13.65 per share. The company has been trying to reduce its dependence on PCs, which are becoming tougher to sell as more people switch over to smartphones and tablet computers. Michael Dell says the company can thrive again by expanding into business software and data analytics -- a transition he says will be easier without having to worry about the short-term financial interests of Wall Street.
But Icahn wrote that the PC maker's future is bright, and all shareholders should benefit from that, not just Michael Dell. He said Icahn Enterprises holds a substantial stake in Dell but did not specify how much.
Dell's special committee said Thursday it is conducting a search for better alternatives to the proposed buyout, and Icahn and others are welcome to participate.
Dell shares have traded above the buyout offering price since the deal was announced, a sign that investors expect a sweeter offer. The stock closed Thursday at $14.22.