Dell shares were up 1.5 percent at $14.37 in afternoon trading, well above the take-private offer price of $13.65, after Icahn said on Monday his Icahn Enterprises LP had reached a confidentiality agreement with the company and looked forward to "its review of Dell's confidential information."
Investors, including No. 2 and No. 3 shareholders Southeastern Asset Management and T. Rowe Price, have publicly voiced their objections to a $24.4 billion buyout led by founder Dell and private equity outfit Silver Lake.
The founder is trying to complete his company's transition from a low-margin PC maker into a provider of computing services, a makeover that has taken on new urgency as the PC market shrinks and that analysts say might best be carried out away from public shareholder pressure and scrutiny.
But Icahn demanded last week that Dell pay out $15.7 billion in special dividends instead of going private, arguing the buyout short-changed shareholders by undervaluing the company and benefited mainly Michael Dell.
CNBC reported the billionaire investor, who has a reputation for aggressively demanding changes at companies he targets, had built up a stake of about 6 percent in the PC maker.
A source with knowledge of the situation said Icahn's and Dell's confidentiality agreement does not have a contractual "standstill" obligation - meaning he is not obligated to stop trading stock in the company. But the activist investor would not be able to trade the stock while he is privy to non-public information in any case, the source added.
Dell is now in a "go-shop" period that ends on March 22, during which its advisors are actively soliciting bids superior to Silver Lake's and Michael Dell's proposed deal.
Cross Research analyst Shannon Cross said the move was just another step in Dell's commitment to examine alternative offers. But she said it "probably indicates Carl Icahn is serious about his proposal."
"The Special Committee welcomes Carl Icahn and all other interested parties to participate in the 'go-shop' process," the committee said in a statement on Monday. "Our goal is to determine if there are alternative transactions that could be superior for Dell's public shareholders to the going-private transaction and to secure the best result for them - whether that is the announced transaction or an alternative."
Icahn, whose arrival on the scene typically puts companies on guard, wants the PC maker to pay $9 a share in dividends immediately from its own cash and from raising new debt.
He argued that, combined with a "stub" value of $13.81 per share his firm calculated based on discounted cash flow, his proposal would deliver a total value of $22.81 per share.
That would be a 67 percent premium to the $13.65 buyout price put forward by Michael Dell.
© Thomson Reuters 2013