Investors back Icahn on Yahoo

Billionaire investor Carl Icahn, pressing Yahoo Inc. to rekindle takeover talks with Microsoft Corp., won more support from shareholders as the Internet company weighed new proposals from its former suitor.

T. Boone Pickens, chairman of BP Capital, told CNBC on Tuesday that he bought 10 million shares, or less than 1% of Yahoo, after Icahn said he would seek to oust its directors if they failed to combine with the software maker. Microsoft scrapped its planned takeover May 3. Microsoft has since offered to buy Yahoo’s search unit, two people familiar with the talks said.

Under the proposed terms, Microsoft would get a passive stake in Yahoo, which would keep its display-advertising unit and spin off holdings in Asia, said one of the people, who declined to be named because talks were private. The move may not be enough to appease Icahn, backed by investors such as Paulson & Co.

“It’s not good for Yahoo,” said Colin Gillis, an analyst at Canaccord Adams in New York. “What do they wind up getting, more cash on their balance sheet? You’ve got lesser assets, more cash and Carl Icahn owns your shares. That’s not a good combination.”

Pickens, 79, told CNBC that he bought 10 million Yahoo shares, which would be worth about $277 million based on Monday’s closing price.

Third Point, led by activist investor Daniel Loeb, has amassed more Yahoo stock and will support Icahn, a person familiar with the matter said Tuesday.

Third Point bought 1 million shares of Yahoo and 6.85 million shares of Microsoft in the first quarter, according to a regulatory filing. A spokesman declined to comment.

Shares of Sunnyvale, Calif.-based Yahoo declined 20 cents to $27.48.