Billionaire investor Carl Icahn maybe a fairly new heavy-hitter at Yahoo (having only recently scooped up about 10 million shares and options to acquire 49 million more) but he has looked on for way too long (uh, days?) as Yahoo has “botched” merger negotiation after merger negotiation with Microsoft and he’s had about enough. His solution? A new board loaded with hand-picked directors, including former CEO of Viacom, a Harvard professor and even Dallas Mavericks owner Mark Cuban. Oh yeah, and him, too. But, assuming he stands a chance at overthrowing Yahoo CEO Jerry Yang’s board, will Microsoft ever agree to return to the dealmaking table?

Billionaire investor Carl Icahn Thursday filed a proxy slate to unseat Yahoo Inc.'s board, accusing its directors of acting "irrationally" and setting the stage for what could be a battle for control of the Internet company.

Mr. Icahn's move -- preceded by his purchase of roughly 10 million Yahoo shares and options to acquire 49 million more -- is largely a bet that he can interest Microsoft Corp. in reconsidering its abandoned bid for Yahoo. It isn't clear whether Microsoft is willing to do so or whether Mr. Icahn can win the support of shareholders to push his board slate through at Yahoo's July 3 annual meeting.

In a statement Thursday, Yahoo said it sent a letter to Mr. Icahn saying his view "reflects a significant misunderstanding of the facts about the Microsoft proposal and the diligence with which our board evaluated and responded to that proposal." A Microsoft spokesman declined to comment.

Some investors believe Mr. Icahn's role in the takeover saga increases the chances of a deal at a premium to Yahoo's current share price. In a letter to Yahoo Chairman Roy Bostock, Mr. Icahn said other shareholders asked him to "establish a new board which would attempt to negotiate a successful merger with Microsoft, something that in my opinion the current board has completely botched."

Mr. Icahn's slate of 10 candidates to Yahoo's board includes himself, his associate Keith Meister, former Viacom Inc. Chief Executive Frank Biondi, Harvard Law School Professor Lucian Bebchuk, Dallas Mavericks owner Mark Cuban and a number of other investors. In his letter, Mr. Icahn said he had requested Federal Trade Commission antitrust clearance to buy up to about $2.5 billion worth of Yahoo stock.

Yahoo's ten-member board is comprised of nine independent directors and Yahoo CEO Jerry Yang.

Continue reading on WSJ.com

Next article » UBS: All Too Surreal

Previous article « H-P Investors Raise Concerns About the EDS Deal