YAHOO HAS STRUCK a deal with billionaire corporate raider Carl Icahn to fend off acquisition by Microsoft and avert a shareholder proxy confrontation, the parties announced Monday.

The number two Internet resources company's settlement with Icahn gives him one of two new seats on an expanded Yahoo board that will also seat two of his nominated directors.

Icahn, who holds nearly five per cent of Yahoo's stock, had been seeking to replace Yahoo's entire board of directors at its upcoming annual shareholders meeting on August 1st. He'd also recently negotiated with Microsoft about potentially selling it Yahoo's Internet search operation, possibly along with a substantial minority investment in the rest of the company.

However, Icahn reportedly failed to convince enough other holders of significant stakes in Yahoo that he had any better ideas for improving its performance other than to dismantle the company by selling all or part of it to Microsoft for not much more than its earlier offer.

The apparent compromise deal with Icahn will leave Yahoo's present executive management team in place and is expected to derail any Microsoft acquistion, at least in the short term. µ

L'Inq
International Herald Tribune