Yahoo on Wednesday sent a letter to stockholders defending its alliance with Google and criticizing Carl Icahn's campaign to install a Microsoft-friendly board of directors.
Yahoo's board is lobbying for allies as it heads for a showdown with the billionaire corporate raider at an annual gathering of the California firm's stockholders on August 1.
Icahn accuses Yahoo's board of bungling takeover talks with Microsoft and is trying to replace the board with members whose mandate would be to get the struggling Internet pioneer into a tie-up with the US software giant.
"You can choose to vote for a slate of nominees with no articulated plan for the future of Yahoo," board chairman Roy Bostock and chief executive Jerry Yang said in the letter.
"Or you can choose to vote for your existing board of directors which has the independence, experience, knowledge and commitment to navigate the company through the rapidly-changing Internet environment, execute on our strategic objectives and deliver value for Yahoo and its stockholders."
Yang and Bostock revealed that, after failed takeover talks, Microsoft suggested a "search-only hybrid proposal" in which it would buy Yahoo's online search business for a billion dollars plus a percentage of future ad revenues.
The offer included Microsoft making an eight billion dollar investment in Yahoo, but would have barred Yahoo from making search deals with anyone else.
The deal also would have given Microsoft veto authority over any proposed sale of Yahoo.
Yahoo rejected Microsoft's "hybrid" offer and signed a deal with Google to have the Internet search king use its expertise to target ads posted alongside results from Yahoo online search queries.
Google shares revenue from the advertising with Yahoo.
"The Google agreement is far better than Microsoft's search-only hybrid proposal," Bostock and Yang said in the letter. "That's why we moved forward with it."
The deal with Google doesn't preclude Yahoo from making other advertising alliances and is expected to improve Yahoo's cash flow by 250 to 450 million dollars in its first year, according to the letter.
"It is time for Yahoo to turn its undivided attention to implementing its key strategies, and we therefore urge you to reject Mr. Icahn's slate and his ill-defined agenda," the executives wrote.
Icahn is tapping into the ire of investors upset that the Yahoo board rebuffed Microsoft's takeover bid.
Microsoft offered to buy Yahoo for 44.6 billion dollars in stock and cash on January 31, but withdrew the offer on May 3, saying Yahoo refused to budge despite the software giant upping its bid to nearly 48 billion dollars.