• Financial Times, Friday, May 16, 2008 11:15 AM

Carl Icahn launched his proxy fight against the Yahoo board in a letter to chairman Roy Bostock on Thursday. Icahn said Yahoo "had completely botched" negotiations with Microsoft, and listed 10 replacements to stand against the board at the company's annual shareholder meeting on July 3. Icahn said he would move forward with a proxy battle unless Yahoo agreed to sell to Microsoft for $33 per share, which he described as a superior option for shareholders than remaining independent. However, Microsoft, as yet, has given no indication that it still wants to purchase Yahoo.

Meanwhile, the billionaire investor continues to up his stake in the Web giant: In the letter, Icahn confirmed that he's purchased more than 59 million Yahoo shares during the past 10 days-around 4% of the company-and was now seeking clearance from the FTC to up his stake to $2.5 billion of Yahoo stock, or 7% of the company. Hedge Fund Paulson & Co also revealed that it bought more than 50 million Yahoo shares in support of Icahn.

Later Thursday, Yahoo's Bostock issued a response to Icahn's letter clearly stating that the company's board does not believe it's in the best interest of shareholders to wage a proxy battle "for the express purpose of trying to force a sale of Yahoo to a formerly interested buyer who has publicly stated that they have moved on."

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