Icahn may run Yahoo proxy campaign: source

By Dane Hamilton

NEW YORK (Reuters) - Billionaire investor Carl Icahn is considering mounting a proxy campaign to replace Yahoo Inc (YHOO.O: Quote, Profile, Research, Stock Buzz) board members after the company failed to reach a deal to merge with Microsoft Corp (MSFT.O: Quote, Profile, Research, Stock Buzz), a source close to the matter said on Tuesday.

The veteran investor has built up a stake in Yahoo in the last week and would run a slate in an effort to force the company back to the negotiating table with Microsoft, the source said, asking for anonymity because the decision to go ahead with the move has not yet been made.

It is unlikely that Icahn, a veteran of numerous proxy battles, will join with other hedge funds in the campaign, the source said. A decision to run a proxy slate this year must be made by Thursday to qualify for the July 3 annual meeting.

Still, other activist hedge fund managers may try to get involved, including Scott Galloway and his investment firm Firebrand Partners LLC, the Wall Street Journal reported on Tuesday evening, citing people close to the matter.

Galloway won a seat on the New York Times Co (NYT.N: Quote, Profile, Research, Stock Buzz) board last month after hedge fund Harbinger Capital Partners spent half a billion dollars to bankroll his campaign to try to force change at the newspaper publisher.

Galloway, a professor at New York University's Stern School of Business, declined to comment on the report. A Harbinger representative was not immediately available for comment on whether it would back Galloway if he were to wage a campaign against Yahoo.

Microsoft walked away from its Yahoo bid this month after the Internet company turned down its offer to raise it to $47.5 billion, or $33 per share. Yahoo demanded $37 per share.

A Yahoo spokesman declined to comment on Icahn's potential moves. Microsoft executives have said they were done with their pursuit of Yahoo, and one person close to Microsoft on Tuesday said that remained the case.