Saying Yahoo's board "completely botched" takeover talks with Microsoft, billionaire investor Carl Icahn on Thursday launched a bid for...

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SAN FRANCISCO — Saying Yahoo’s board “completely botched” takeover talks with Microsoft, billionaire investor Carl Icahn on Thursday launched a bid for control of the Internet giant by nominating a slate to unseat the board of directors.

The candidates include Icahn, former Viacom Chief Executive Frank Biondi Jr., Dallas Mavericks owner Mark Cuban and New Line Cinema co-chairman Robert Shaye.

In a letter to Yahoo Chairman Roy Bostock, Icahn said he had snapped up 59 million Yahoo shares, worth about $1.5 billion, and was seeking permission from the Securities and Exchange Commission to amass up to $2.5 billion worth. His holdings constitute about 4.3 percent of the Sunnyvale, Calif., company’s stock.

“It is unconscionable that you have not allowed your shareholders to choose to accept an offer that represented a 72 percent premium over Yahoo’s closing price of $19.18 on the day before the initial Microsoft offer,” Icahn wrote.

“I and many of your shareholders strongly believe that a combination between Yahoo and Microsoft would form a dynamic company and more importantly would be a force strong enough to compete with Google on the Internet.”

He added that he hoped Yahoo would listen to its shareholders and “move expeditiously” to close a deal with Microsoft, which earlier in May withdrew a $47.5 billion offer for Yahoo after they failed to agree on a price.

In a response late Thursday, Bostock criticized Icahn for having a “significant misunderstanding of the facts” about Microsoft’s offer and the Yahoo board’s response. He also emphasized that Yahoo remains open to a sale “if it offers our stockholders full and certain value.”

Microsoft declined to comment.

Each company’s stock gained nearly 2 percent Thursday. Yahoo rose 61 cents to $27.75. Microsoft gained 52 cents to $30.45.

Yahoo is vulnerable to a proxy battle for control of the company because all 10 board members are up for re-election at the annual meeting July 3. Yahoo requires a majority vote among shareholders to elect a new director.

The company does have a shareholder rights plan that could make it more difficult to seize control through a tender offer to shareholders, essentially asking shareholders to pledge their shares directly to Icahn.

Investment company Paulson & Co. said it had bought 50 million Yahoo shares and would support Icahn’s slate.

“We were disappointed that Yahoo failed to reach an agreement with Microsoft,” the company said. “We continue to believe that a combination between Yahoo and Microsoft would form a dynamic company and a stronger competitor to Google.”

Other candidates nominated by Icahn include Harvard Law School professor Lucian Bebchuk, Hawkeye Investments President John Chapple, Impact Venture Partners Managing General Partner Adam Dell, Icahn Enterprises Principal Executive Officer Keith Meister, Ocean Road Advisors Chairman Edward Meyer and private investor Brian Posner.

Still unclear was whether Icahn would be able to entice Microsoft back to the bargaining table. Icahn has received no signs of renewed interest from the tech giant, according to a person familiar with the matter.

The maker of Windows and Office software wants to combine with Yahoo to compete better with Google in Internet advertising.

Microsoft made a public bid of $31 a share in cash and stock Feb. 1 and eventually raised its offer to $33 a share. But it broke off talks May 3 after Yahoo asked for $37 a share.