Page last updated at 21:10 GMT, Wednesday, 4 June 2008 22:10 UK

Yahoo 'sabotaged' Microsoft deal

Yahoo office
Yahoo said it engaged in "extensive discussions" with Microsoft.

A billionaire Yahoo shareholder has claimed the Yahoo board deliberately "sabotaged" Microsoft's bid to buy the internet company.

Investor Carl Icahn claimed the board went to "inordinate lengths" to prevent the $47.5bn (£24bn) merger deal with Microsoft going ahead.

Mr Icahn has said he wants to remove the Yahoo board.

But Yahoo reiterated that it would have agreed a deal if it had been in the best interests of its shareholders.

“To that end, Yahoo has engaged in extensive discussions with Microsoft over the last several months, culminating in Microsoft's decision not to pursue an acquisition of Yahoo," the internet company said in a statement.

"Mr Icahn's assertions ignore this clear factual record,” it added.

The claims of sabotage came in a letter Carl Icahn wrote to Yahoo Chairman Roy Bostock.

In it Mr Icahn argues that Yahoo's actions could scupper any future chances of a Yahoo-Microsoft deal.

"In my opinion it will be extremely difficult for Microsoft or any other companies to trust, work with and negotiate with a company that would go to these lengths," the letter said.

Mr Icahn said the details came to light in documents released by a court in connection with a shareholder lawsuit.

Yahoo was forced to postpone its annual general meeting last month after Mr Icahn threatened to unseat the board.

Yahoo said this week that it had been rescheduled for 1 August.

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