Icahn Presses Yahoo to Sell to Microsoft

l C. Icahn told Yahoo on Friday that it should offer to sell the company to Microsoft for $34.375 a share, or about $48.7 billion.

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Times Topics: The Battle for Yahoo

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In his latest letter to Roy J. Bostock, Yahoo’s chairman, Mr. Icahn said that if Microsoft did not accept the offer “in a friendly and cooperative transaction,” he would push Yahoo to do a deal with Google if he won control of the Yahoo board.

Mr. Icahn, who has offered a dissident slate to replace Yahoo’s board at its annual meeting on Aug. 1, had not previously named a price at which he believed Yahoo should agree to a sale.

Microsoft walked away from a $33 a share, or $47.5 billion offer, on May 3, after Yahoo demanded $37 a share.

Yahoo shares closed in trading up 11 cents to $26.44.

Mr. Icahn, a veteran of many shareholder campaigns, renewed his attack on Yahoo and its co-founder, Jerry Yang, whom he accused of “sabotaging” the possibility of a deal with Microsoft. Investment funds controlled by Mr. Icahn hold about 59 million shares and options, or about 4.28 percent of the company.

Mr. Icahn reiterated his previous demand that Yahoo cancel a “change of control” severance plan that awards accelerated benefits to the bulk of Yahoo’s staff members in the event of a takeover.

Mr. Icahn cited a recent shareholder lawsuit against Yahoo, in which the company estimated the value of the plan at “a staggering $2.4 billion,” which he said is “a major obstacle” to any Microsoft acquisition.

Yahoo, in response, said Mr. Icahn had an “inaccurate interpretation” of its employee retention plan but did not elaborate. “Mr. Icahn’s suggestion that we cancel our retention plan would have a destabilizing impact on Yahoo,” it said.

It also said Mr. Icahn had no “credible plan to operate Yahoo” if he won his proxy campaign.

It reiterated that it was “open to any transaction, including a sale to Microsoft if it is in the best interests of shareholders.”

Microsoft declined to comment.