Carl Icahn's investment firm and several hedge funds are facing legal action in Delaware over their involvement in appraisal and merger-arbitrage strategies linked to Silver Lake's $25bn acquisition of Endeavor Group Holdings, according to a report by Bloomberg.

Endeavor and Silver Lake filed a complaint in Delaware on Monday seeking to block Icahn's firm from pursuing its appraisal claim and alleging that it coordinated with other investors, including Pentwater Capital Management and Troluce Capital Advisors, as part of a broader campaign to challenge the transaction.

The case highlights the growing role of hedge funds in using Delaware's appraisal process and shareholder litigation to contest the terms of private equity-backed takeovers.

Silver Lake paid $27.50 a share for Endeavor, but dozens of investment firms subsequently sought appraisal proceedings in Delaware's Court of Chancery, arguing that the company was worth more than the consideration agreed under the deal. The case has become the largest appraisal effort of its kind in Delaware.

Separately, Icahn Enterprises and a Swedish bank are pursuing a proposed class action alleging that Endeavor executives breached their fiduciary duties by supporting a transaction that they say disadvantaged minority shareholders.

Endeavor and Silver Lake's latest complaint accuses Icahn's firm, Pentwater and Troluce of working together “for the common purpose of pursuing a broad litigation offensive attacking the merger” and alleges violations of securities and antitrust laws.

Troluce chief executive Jared Dubin said the firm was reviewing the allegations and intended to continue pursuing its rights in Delaware because it believes the merger consideration substantially undervalued Endeavor's assets.

Representatives of Icahn Enterprises and Pentwater reportedly did not immediately comment.

Silver Lake and Endeavor are also seeking to prevent investment firms from pursuing appraisal claims based on shares they acquired after the buyout was announced. Their lawyers argue that Delaware's appraisal mechanism was designed to provide protection for shareholders who were unable to prevent a transaction and wanted judicial review of the price, rather than create a tradable litigation opportunity.