The management-led buyout of Dell Inc. (NASDAQ: DELL) keeps getting stranger and more drawn out by the day. In an effort by Carl Icahn to keep shareholders in the game and to get a higher buyout price, a higher buyout price has been offered by Michael Dell and by Silver Lake. The problem is that the offer is only $0.10 higher at $13.75 per share, and it comes with contingencies. Shareholders are not likely to fall for what is simply a dime-bag offer.

Carl Icahn has been talking up a warrant with a smaller public float, which we would equate as being close to a tracking stock. A special committee of Dell’s board of directors is angling for at least $14.00 per share.   The reason that this new dime-bag offer from Michael Dell and Silver Lake has so much doubt is because of the contingencies. The buyout team is seeking a change to the way the votes are counted, saying that the present method of counting an abstention as a “No” vote has no “rational basis” and is “patently unfair.” Dell’s 16% stake in the company does not count in the final buyout voting.

The special committee is now said to be considering the price hike, of a whole dime, and the voting rule change. What stands out is that the committee created the voting count methodology. The board of directors is also trying to avoid a proxy fight with Carl Icahn. Sending shareholders a dime bag in addition to the $13.65 is not going to change Carl Icahn’s stance.

Dell’s shareholders are getting a raw deal here from how the stock is reacting. At first Dell shares were up as much as about 3%m but now the stock in mid-afternoon trading is down a nickel at $12.83. This does not at all resemble a new bidding war. An increase of a mere dime and with new conditions attached just is not a good deal. This is the sort of deal that a general offers to another general when he would rather just squash them rather than get a surrender.

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