Icahn sweetens bid for Dell: Will it sway shareholders?

In the latest chapter in Dell's going private transaction soap opera, investor Carl Icahn sweetened his bid for the company ahead of a July 18 shareholder vote.

Icahn, who promised on Thursday a better bid would be on deck, said his revised proposal would mean Dell would self tender 1.1 billion shares of stock for $14 a share plus one transferrable warrant for every four shares purchased.

These warrants would allow shareholders for 7 years to purchase a share of Dell for $20. Should Dell shares be worth more than $20 these shareholders would benefit.

Icahn promising new, higher Dell bid to be unveiled on Friday | ISS endorses Dell, Silver Lake buyout plan for $24.4B | Dell CEO reportedly won't raise offer to take PC company private | Dell to investors: Icahn's deal dicey, business stinks

Icahn argued that the total value to shareholders would be $15.50 to $18 a share compared to the Michael Dell/Silver Lake deal valued at $13.65 a share. Icahn and Southeastern Asset Management said they won't tender shares so shareholders who held onto Dell would be rewarded.

The problem: ISS has already advised investors to vote for the Michael Dell deal. Icahn blasted the ISS recommendation, which revolved around the time period Dell shareholders would get cash from Icahn. Icahn said that Michael Dell/Silver Lake wouldn't pay shareholders cash immediately either.

Meanwhile, Icahn said he was committed to the company:

We are completely committed to our proposal and believe that it is economically better for stockholders than the Michael Dell/Silver Lake freeze out transaction. We are also 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. We believe there would be several excellent candidates for this position who would be very interested in running this company once a clear mandate has been established.

Here's Icahn's math:

As noted before one major consideration to consider is Dell's debt load after either deal. Debt can limit Dell's ability to transform and become a core component of a fear, uncertainty and doubt campaign from rivals. Let's face it the hardware business---PCs, servers and storage---isn't going to get any easier in the years to come. As much as shareholders can ponder the returns, the strategy and management should also have a big role in any vote.