Yahoo rebuffs plan to oust board

Mr Icahn has a history of waging corporate battles

Yahoo has rebuffed billionaire investor Carl Icahn's plan to oust the current board of the net portal.

Mr Icahn is amassing a stake in Yahoo in an attempt to force out the current board over its handling of a failed merger deal with Microsoft.

Mr Icahn backed the bid by Microsoft to buy Yahoo, which directors rejected.

Yahoo chairman Roy Bostock has written to Mr Icahn saying it was not in shareholders' interest to allow him and his "handpicked nominees" to take over.

Mr Bostock also criticised efforts to use the board fight to as a way to "force a sale of Yahoo to a formerly interested buyer".

Mr Icahn has said Yahoo's directors were wrong to spurn Microsoft's offer to buy the company for $33 a share - a figure which valued the company at $47.5bn (£24.36bn).

In his letter, Mr Bostock rejected Mr Icahn's claim that Yahoo had been acting "irrationally" in its dealings with Microsoft and said the company had exercised "diligence" and been willing to negotiate.

"The record of our efforts to engage Microsoft in meaningful discussions is unequivocal," wrote Mr Bostock.

No offer

In his proposal to take over the Yahoo board when shareholders gather in July, Mr Icahn claimed that not putting Microsoft's offer to the investors was "unconscionable".

Microsoft has said a deal with Yahoo is no longer on the table

He said the offer was a 72% premium to the value of Yahoo shares before the bid was tabled.

"I and many of your shareholders strongly believe that a combination between Yahoo and Microsoft would form a dynamic company and more importantly would be a force strong enough to compete with Google on the internet," said Mr Icahn.

As well as hoping to install a new board of directors when shareholders meet, Mr Icahn has said he will resume talks with Microsoft.

But in his response Mr Bostock repeated that there was no longer any deal on the table from Microsoft.

"May I remind you that there is currently no acquisition offer on the table from that company (Microsoft) or any other party," he wrote.

"That said, we have been crystal clear in our stance that we have been and remain willing to consider any proposal from any party including Microsoft if it offers our stockholders full and certain value."

Stake battle

In his letter, the first response from Yahoo since Mr Icahn launched his fight to replace the board, Mr Bostock rehearsed the actions the board had taken while negotiating with Microsoft.

Wrote Mr Bostock: "Your letter reflects a significant misunderstanding of the facts about the Microsoft proposal and the diligence with which our board evaluated and responded to the proposal."

He continued: "A fair minded review of the factual record leads to one conclusion: That Yahoo's ten-member board, comprised of nine independent directors along with Yahoo CEO Jerry Yang, remains the best and most qualified group to maximise value for all Yahoo stockholders."

Microsoft has already said that, contrary to rumours of it possibly making another move later in the year, talks with Yahoo are over.

To help his bid to remove the board, Mr Icahn has reportedly bought around 59 million Yahoo shares - a 4.4% stake in the company. He has declared a desire to buy up to $2.5bn worth of shares - a 7% stake.

By comparison Yahoo boss Jerry Yang and fellow co-founder David Filo hold 10% stakes in the company.