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Carl Icahn has tossed yet another letter at Yahoo!, reiterating his claims that it botched a possible merger with Microsoft and detailing his plans for the company should he succeed in overhauling its board of directors.

After booting Jerry Yang, Icahn says, he'll renew merger talks with Microsoft. And if that doesn't work, he'll strike a search deal with Google.

Earlier this week, Yahoo! chairman Roy Bostock accused Icahn of seriously misrepresenting the company's response to Microsoft's mega-merger bid. And today, Icahn responded by saying "I'm not misrepresenting! You are!" Or words to that effect.

The notorious takeover artist continues to refer to Yahoo!'s post-bid employee retention plan as a suicide device. "I stand by my characterization of your 'poison pill' severance plan and I find it humorous to see you attempt to defend it," he wrote in this morning's letter to Chairman Bostock.

"Roy, it is you who 'misrepresents and misstates the details' of the plan. Much like the rhetoric in many well known political campaigns, you keep repeating misstatements in the hopes that by repeating misstatements enough times it will convince your shareholders that these misstatements are valid."

Bostock had also asked Icahn "what exactly would happen to our Company if you and your nominees were to take control of Yahoo!?" So Icahn responded with a five-point plan:

  • First, I would work to have the board replace your "poison pill" severance plan with an acceptable alternative.
  • Second, I intend to ask our new board to hire a talented and experienced CEO (attempting to replicate Google's success with Eric Schmidt) to replace Jerry Yang and return Jerry to his role as "Chief Yahoo". Indeed, it was much speculated that Jerry would serve in the CEO role temporarily until a permanent CEO was hired after the board asked Terry Semel to resign.
  • Third, I intend to ask our new board to inform Microsoft that unless any alternative transaction can insure a $33 or higher stock price (of which I am skeptical) all talks of alternative transactions are over.
  • Fourth, I will ask our new board to offer publicly to sell Yahoo! to Microsoft in a friendly and cooperative transaction.
  • Fifth, to the extent Microsoft does not want to make a proposal, I will ask our new board do a deal on search with Google, but only if it contains termination provisions that would in no way impede a subsequent acquisition by Microsoft.

Icahn is set to launch his proxy battle at Yahoo!'s annual shareholders meeting on August 1. But he's also urging Bostock to kill the retention plan on his own - and make the sale on its own. "In my opinion, Microsoft does not believe you will ever sell the entire company on a friendly basis," the letter continued. "So why don't you stop dancing around the subject and publicly offer to sell the company to Microsoft for $34.375 per share and promise to cooperate completely?"

This time, Roy didn't answer. But Yahoo! did issue a canned-statement repeating what it repeated before. "Leaving aside Mr. Icahn's inaccurate interpretation of our retention plan, we again note that he has no credible plan to operate Yahoo!," the statement reads. "We believe that Mr. Icahn's suggestion that we cancel our retention plan would have a destabilizing impact on Yahoo! and would clearly not be in the best interests of our shareholders.

"Furthermore, his suggestion that we put out a price publicly to see if Microsoft will alter its stated position is ill-advised. As we have stated numerous times publicly and privately, we are open to any transaction including a sale to Microsoft if it is in the best interests of shareholders."

And so we wait for another letter from Mr. Icahn, who now owns 59 million Yahoo! shares - about a four per cent stake. Perhaps he'll repeat that Yahoo! is repeating itself. Yes, it's Groundhog Day. At least until August 1. ®

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