Dell
Dell headquarters

Dell Technologies on Thursday raised its offer to buy back shares tied to its interest in software maker VMware to $120 per share, still way short of the $300 price suggested by activist investor Carl Icahn.

The computer maker in July offered to pay $21.7 billion, or $109 per share, in cash and stock to buy back shares tied to its interest in VMware, returning the computer maker to the stock market without an initial public offering.

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Hedge fund manager Icahn, who owns a 9.3 percent stake in Dell, has resisted the plan, saying the proposed deal massively undervalues the tracking stock.

Icahn sued Dell earlier this month and said VMware should be worth $300 per share. The billionaire investor said on Wednesday Class C shareholders should be given basic corporate governance rights, including the right to elect at least three independent directors.

Dell said on Thursday that its proposal includes the ability for Class C stockholders to elect an independent director.

While Icahn did not immediately respond to requests for comment, Dell said Elliott Management and Canyon Partners – which had earlier opposed the deal – have agreed to vote in favor of the revised transaction.

“To this point, we continue to speak with many DVMT/VMW shareholders and believe 2-3 board seats for current tracking stock holders and a larger percentage ownership of Dell are major sticking points that must be added to make sure the deal is ultimately consummated,” Wedbush analyst Dan Ives said.

In its previous offer, Dell had offered to exchange each share of VMware tracking stock for 1.3665 Class C common shares with cash consideration of not more than $9 billion.

The latest offer equates to 1.5043-1.8130 Class C shares with a cash component of up to $14 billion.

The tracking stock is tied to an 81 percent economic stake in software company VMware. The transaction will allow Dell to bypass the traditional IPO process, which would likely have involved grilling by stock market investors over Dell’s $52.7 billion debt pile.

The cash part of the increased offer price Dell will be funded by new debt of up to $5 billion, the company said in a statement.

Reuters reported on Tuesday that Dell was working with investment banks to add more cash to its buy back offer.