Icahn may fight for control of Yahoo

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Billionaire investor Carl Icahn is moving ahead with plans to nominate directors for the board of Yahoo Thursday, two people familiar with his thinking said today, giving investors a chance to show how badly they want the Internet company sold.

The famed activist, who has purchased 50 million Yahoo shares, has asked 12 people if they would be willing to serve if asked, the people said, and might try to take control of the Internet powerhouse by unseating the entire 10-person board.

Among the dozen is former Viacom Chief Executive Frank Biondi Jr., the people said.

Reports that Icahn (left) was considering running a full slate surprised some major shareholders, who had been told by Icahn’s allies just a day before that he intended to put forward only a few names to serve as agitators.

“I hadn’t heard it even contemplated he would do a full slate,” one big Yahoo investor said. “It puts more pressure, to the extent he actually does it, on Yahoo. But it also comes with attendant risks for Icahn. Getting a full slate elected is more difficult.”

Still unclear late Wednesday was whether Icahn would be able to entice Microsoft, which recently withdrew its $47.5-billion offer for Yahoo, back to the bargaining table. The Redmond, Wash.-based maker of Windows and Office software wants to combine with Yahoo...

... in order to compete better with Google in the burgeoning market for Internet advertising. Microsoft earlier dropped plans to run its own slate of deal-friendly candidates for the board. It declined to comment today.

“The million dollar question now is: Is Microsoft a buyer or not?” said Anthony Valencia, an analyst with Yahoo investor Trust Co. of the West.

Many investors have criticized Yahoo’s incumbent directors for failing to accept Microsoft’s unsolicited takeover offer. Microsoft made a public bid of $31 a share in cash and stock on Feb. 1 and eventually raised its offer to $33 a share. But it broke off talks on May 3 after Yahoo asked for $37 a share.

That breakdown left investors plotting how best to pressure Yahoo to restart the negotiations. Some welcomed Icahn’s entrance to the fray this week but said they were nervous about putting the maverick strategist in full charge of the company.

Yet Icahn may have found enough support in his conversations that he believed he could win control, according to allies and analysts tracking the fight.

“Icahn knows he has a higher burden to meet to get the support of shareholders when you are handing the keys to the car to an entirely new board,” said Chris Young, director of mergers and acquisitions research at advisory firm RiskMetrics Group.

Icahn couldn’t be reached, and Yahoo and potential board candidate Biondi declined to comment.

-- Joseph Menn and Jessica Guynn