Signaling that he wants to invest up to $2.5 billion, activist investor Carl Icahn launched Thursday, May 15, a proxy contest at Yahoo! Inc., nominating 10 directors in the hopes of negotiating a successful merger with Microsoft Corp.

In a letter addressed to Yahoo! chairman Roy Bostock, Icahn said: "It is clear to me that the board of directors of Yahoo! has acted irrationally and lost the faith of shareholders and Microsoft."

He called Microsoft's $33-per-share offer price a "superior alternative" to the company's standalone prospects and pointed out that the offer represented a 72% premium to Yahoo!'s closing price of $19.18 ahead of the offer. Microsoft originally put forth a $31 per share offer and, after increasing the bid but being repeatedly rebuffed, withdrew its $47.5 billion bid May 3.

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