Yahoo has published a response to news that investor Carl Icahn and Microsoft are apparently planning to oust Yahoo’s current board of directors and replace co-founder Jerry Yang in his role as CEO. The company acted surprised and noted that Yahoo!’s independent directors and management approached Microsoft CEO Steve Ballmer about just such a transaction as recently as June, "only to be told that Microsoft was no longer interested even in the price range which they had previously proposed."

Yahoo believes that Icahn and Ballmer "have teamed up in an apparent effort to force Yahoo into selling to Microsoft its Search business at a price to be determined in a future ’negotiation’ between Mr. Icahn’s directors and Microsoft’s management," which Yahoo believes would not be in the interest of Yahoo’s stockholders. Instead, Yahoo said that it "invites" Microsoft to make a proposal immediately, if the company is "really" interested in purchasing Yahoo: "And if Mr. Icahn has an actual plan for Yahoo! beyond hoping that Microsoft might actually consummate a deal which they have repeatedly walked away from, we would be very interested in hearing it," the statement reads.

We can’t help but note that it appears that Yahoo’s board has not yet noticed that its negotiation position has changed dramatically and the time for making demands may have passed. Icahn and Microsoft could pose a serious threat in a proxy fight that would replace the current board with a board that would simply prepare the sale of Yahoo to Microsoft. Now that Microsoft has signalled that it is still interested in buying Yahoo, presumably at much more favourable conditions than what was on the table before, and Carl Icahn acting as the facilitator of a potential deal, Yahoo’s board may have to come up with more convincing phrases than simply stating that such a deal would not be in the best interest of shareholders.