Can Icahn take on the Yahoo board and win?

And, if he does, can he woo Microsoft back to the negotiating table?

As billionaire investor Carl Icahn gears up for a proxy fight with Yahoo at its July 3 shareholders' meeting, the question is, can he win? And if he does win, will he be able to persuade Yahoo's jilted suitor, Microsoft, to reconsider its acquisition bid?

Once a deal has soured, like Microsoft's bid to take over Yahoo, it's pretty hard to get the party that thinks it's been wronged back to the table, said Rob Enderle, an analyst at US-based Enderle Group. However, a new board of directors might persuade Microsoft to restart the negotiations, he said.

Microsoft announced its US$44.6 billion bid for Yahoo on February 1, but walked away from the deal three months later, on May 3, saying the companies couldn't agree on a price. Microsoft's last offer was for US$33 per share, or about US$5 billion more than its original offer. Yahoo, however, wanted US$37 per share.

"My initial thought when Microsoft walked away was the only way they'd come back is if Yahoo came to them," Enderle said. "Well, clearly this would be that case -- where Icahn would replace the board and the board comes to Microsoft with an offer. It probably wouldn't be as good as Microsoft's last, best offer, but it might be."

Enderle said Yahoo's entire board is ripe for a shareholder takeover because its stock plummeted after Microsoft pulled out of the deal and the stock market doesn't seem to be coalescing around Yahoo's future strategy. He said the market appears to have lost confidence in Yahoo primarily because of the way it handled the Microsoft acquisition bid.

"And because Yahoo's performance numbers have never met the expectations that have been set for them, that provides an environment where a board can be replaced," Enderle said.

In addition, he said Icahn understands marketing and is very tenacious when he wants something. "He comes in with a plan, he's already identified the board members and he promises an almost immediate return on investment, so that kind of thing can be hard to stop," Enderle said. "So I think the odds favor him to be successful at this point."

Enderle cautioned that although Yahoo isn't necessarily defenseless at this point, it will be much harder to hold off Icahn than it was to hold off Microsoft.

"Now this is an investor coming in, not Microsoft, and the whole 'Microsoft is evil' card won't play here," he said.

Enderle said Yahoo might have to bring in different candidates itself or at least showcase the capabilities of its current board members.

"This is a political, very public election and Icahn is coming in with what looks like a very sure thing, while the Yahoo folks are not," he said. "So the Yahoo folks actually start off at a fairly substantial disadvantage. But that doesn't mean Yahoo can't win, but it has to come up with something that the market will accept, something that is as attractive as what Icahn is offering."

According to the Silicon Alley Insider blog, just the threat of "impeachment" will be sufficient to drive Yahoo's board back to Microsoft even before the July shareholders' meeting.

"Icahn will likely canvass other Yahoo shareholders to assess how much support he has and then demand a meeting with Yahoo's board," Henry Blodget and Dan Frommer said on the blog. "If he can demonstrate that he has the support of a significant percentage of Yahoo's shareholders, we suspect [Yahoo CEO] Jerry Yang or [Yahoo board Chairman] Roy Bostock will soon be placing a call to Microsoft."

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