Icahn is Dynegy's biggest shareholder, controlling 12 million shares, about 10 percent of shares outstanding.
Seneca, which owns 9.3 percent of Dynegy's shares, has opposed Icahn's buyout bid for Dynegy and advised the energy company's shareholders on Friday not to tender shares in the proposed deal.
In a letter sent to Seneca on Wednesday, Dynegy Lead Director Patricia A. Hammick said that waiving the "poison pill" would allow Seneca and unidentified persons to work together to potentially gain control of the Houston company without paying shareholders a premium.
A "poison pill," or shareholder rights plan, is typically enacted to ward off hostile takeovers.
Hammick said Seneca had "every opportunity" to potentially acquire Dynegy either on its own or with others, but did not attempt to provide a competing offer to Icahn's.
Parties were allowed to submit competing offers to Dynegy, but the company announced on Tuesday that it didn't receive any new takeover bids before the Monday deadline.
Icahn's tender offer for Dynegy was to expire Tuesday, but was extended until Feb. 9 to allow time for Federal Energy Regulatory Commission approval. The deal has been cleared by all other necessary regulators.
Dynegy's shareholders also get to vote on the offer. About 5.4 million shares, or about 4.4 percent of Dynegy's outstanding stock, had been tendered as of Tuesday.
Icahn and Dynegy's other shareholders had previously rejected The Blackstone Group L.P.'s offer to buy the company for $5 per share.
Despite the board's recommendation in favor of Icahn's offer of $5.50 a share, some shareholders have opposed the proposed sale and its shares have traded above the offered price. Dynegy closed at $5.73 on Tuesday. Its stock gained 6 cents to $5.79 in midday trading on Wednesday.
Seneca has argued Dynegy is worth $6 to $7 a share and its value could rise to $16 to $18 a share as the economy recovers.
Dynegy owns power plants that burn natural gas, coal and oil. It sells electric energy and related services to grids and utilities in the Midwest, the Northeast and the West.