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Big Mike has been advised to up his offer for Dell after activist investor Carl Icahn finally managed to scrape together the cash to back his refinancing proposal.

The eponymous chief was sitting pretty a short time ago when it was rumoured that Icahn was having trouble raising the $5.2bn in funding needed to revamp the firm and give shareholders $14 each for at least 72 per cent of their shares.

Now the firm's special committee has told Dell's founder and chief that he should up his game if he wants to succeed, a familiar person whispered to Reuters.

The committee's job is to figure out what's best for Dell shareholders out of the deals on the table, based on meetings with investors and recommendations from its investment advisory firm ISS. That company is expected to publish its thoughts on whether Michael Dell's offer is a good deal or not as early as next week, ahead of an 18 July shareholder vote on the plan.

Icahn said yesterday that he and his partner Southeastern Asset Management had gotten commitments, primarily from Jeffries Finance, for the $5.2bn debt financing, which added to $7.5bn on Dell's balance sheet and $2.9bn from sales of receivables would give the necessary $15.6bn to buy up 1.1 billion shares.

In a letter to shareholders, the investor said that his offer was clearly superior since it was higher per share and would save stockholders an additional $270m in break-up fees that could be charged by Mike's partner Silver Lake.

"It is mystifying to us how any independent board which is charged with duties as fiduciaries can recommend to shareholders a $13.65 per share 'freeze-out' merger with Michael Dell/Silver Lake as superior to a proposal that provides stockholder the choice to receive $14 per share for at least 72% of their shares and… to own their remaining shares earning between $3.72 and as high as $5.51 per share," the letter said.

"We believe that it would be a sad outcome for stockholders and would, to say the least, reflect terribly on all who are involved in this process if, after purchasing shares at what we perceive to be a substantially undervalued price of $13.65 per share, Michael Dell and Silver Lake earned substantial returns on their investment while other stockholders are forced to sell.

"It would be even worse if Dell were sold (or broken up) by Michael Dell and Silver Lake in a transaction or transactions with one or more strategic acquirers for a very large profit." ®

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