Icahn,Southeastern propose alternative to Dell buyout

Under the plan,shareholders could hold on to existing stock and have the option of receiving a distribution of 12 a share in cash or 12 a share in stock valued at 1.65 a share.

They said they would finance the proposal from existing cash and about 5.2 billion in new debt.

Both Icahn and Southeastern would take additional shares rather than cash,they said in the letter. Dell shares rose 0.7 per cent to 13.41 in premarket trade on Friday.

Icahn and Southeastern said if Dells board pursues the go-private offer with a shareholder vote,they will put up a slate of 12 directors to challenge the current board.

Icahn and Southeastern,both outspoken opponents of the go-private deal,said in the letter they together hold about 13 per cent of Dell stock. Michael Dell and private equity firm Silver Lake want to take the company private for 13.65 a share,amounting to a 24.4 billion deal. That would make it the largest private equity-led buyout since the 2008 financial crisis. A Silver Lake representative declined to comment. Dell was not immediately available for comment.

Icahn and Southeastern have argued that the buyout effort by Michael Dell and Silver Lake significantly undervalues the company. In April,Blackstone LP ended its pursuit of Dell,after it teamed up with Icahn to challenge the take-private attempt.