Icahn, who is teaming up with Southeastern Asset Management, criticized the proposed $24.4 billion—or $13.65 per share—buyout by founder Michael Dell and private equity firm Silver Lake Partners, calling it a "great giveaway."
"You could look at it real simplistically and not have to do a hell of a lot of work to know that the shareholders in this case are literally getting screwed," he said. "You can camouflage it with numbers and whatever, but $13.65 is a giveaway."
On "Fast Money," Icahn said that his offer would give shareholders $12 per share and they would continue to hold their shares in the company.
"We think that stock on a pro forma will earn for the first year 89 cents, based on BCG's analysis," he said. "And we're only assuming that half of the savings that BCG thought you would have you would have."
Icahn said that under his bid, shareholders would stand to reap greater profit.
"That stub is worth a great deal more than $1.65," he said, adding that his 1990s push to split up RJR Nabisco the stub that was said not to be worth $1 went to $8 within three weeks.
"In this case, I'll tell you this deal is worth more than $1.65," Icahn added.
While hedge fund titan Jim Chanos earlier this week said that he was puzzled by the takeover interest in Dell, Icahn said that he saw plenty of potential from its enterprise software and cloud computing businesses.
(Read More: Icahn: 'I Don't See Chanos on Forbes 400')
"You also have a PC business that's very important to companies like Microsoft and Intel, and I could see possible mergers or possible acquisition bids for the PC business," he said. "I could tell you four or five things I'm looking at."
But the company's leadership would have to change, Icahn said.
"You need a new CEO," he said. "You'd need to change the culture."
Asked if he thought Dell should be fired, Icahn said, "I'm not speaking to that, but I will say that if our board's elected, he's not going to be running the company. That, I can guarantee 100 percent."
Icahn did give Michael Dell a nod for his negotiating skill, adding, "It's pretty good what he pulled off here."
Icahn said that he would put up a slate of 12 candidates to Dell's board of directors, which would implement his plan if elected.
Michael Dell declined an invitation to appear on CNBC, but a special committee of Dell's board released the following statement:
"Mr. Icahn and Southeastern have outlined a potential leveraged recapitalization transaction that they want the Dell Board either to recommend at this time or to consider if the existing going-private transaction is rejected by Dell shareholders.
"They have also proposed replacing the Board with a slate of new directors who they say would approve such a transaction. Consistent with the Special Committee's goal of achieving the best possible outcome for all shareholders, we and our advisors are carefully reviewing the potential transaction to assess the potential risks and rewards to the public shareholders."
Trader disclosure: On May 10, 2013, the following stocks and commodities mentioned or intended to be mentioned on CNBC's "Fast Money" were owned by the "Fast Money" traders: Steve Weiss is long HIG; Steve Weiss is long EEM; Steve Weiss is long SODA; Steve Weiss is long AAMRQ; Steve Weiss is long LCC; Steve Weiss is long UAL; Steve Weiss is long ESRX; Steve Weiss is long THC; Steve Weiss is long CYH; Steve Weiss is long BBRY; Steve Weiss is long AIG; Steve Weiss is long QCOM; Steve Weiss is long C; Steve Weiss is long BAC; Stephanie Link is long AAPL; Stephanie Link is long GS; Stephanie Link is long JPM; Stephanie Link is long CSCO; Stephanie Link is long FB; Stephanie Link is long ESV; Enis Taner is long GS; Enis Taner is long AAPL CALLS FLY; Enis Taner is long NEM CALLS; Enis Taner is long UUP; Enis Taner is long FXE PUTS; Enis Taner is long FXA PUTS; Enis Taner is long VIX CALLS; Simon Baker is long AAPL; Simon Baker is long C; Simon Baker is long JPM; Simon Baker is long WFC; Simon Baker is long SBUX; Simon Baker is long FB; Simon Baker is long MSFT; Simon Baker is long GOOG; Simon Baker is long AIG; Simon Baker is long HPQ.