Paulson hedge fund backs Icahn slate for Yahoo

NEW YORK, May 15 (Reuters) - Paulson & Co., the $30 billion hedge fund that recently built up a stake of 50 million shares of Yahoo Inc (YHOO.O: Quote, Profile, Research, Stock Buzz), said it intends to support a dissident board slate put forth on Thursday by investor Carl Icahn.

But Paulson, which is managed by merger arbitrage specialist John Paulson, said it hopes a proxy fight won't be necessary to get Yahoo and Microsoft Corp (MSFT.O: Quote, Profile, Research, Stock Buzz) back to the bargaining table.

"We were disappointed that Yahoo failed to reach an agreement with Microsoft," said Paulson in a statement. "We continue to believe that a combination between Yahoo and Microsoft would form a dynamic company and a stronger competitor to Google (GOOG.O: Quote, Profile, Research, Stock Buzz).

"We intend to support the Icahn slate but sincerely hope that Yahoo will negotiate an agreement with Microsoft, thereby making a proxy fight unnecessary."

Reuters earlier reported, citing sources, that Paulson had built up the Yahoo stake of about 3.4 percent of the company. The hedge fund has since disclosed the holdings in a regulatory filing. (Reporting by Dane Hamilton; Editing by Brian Moss)