Microsoft C.E.O. Steve Ballmer is still interested in buying Yahoo, but only of the entire Yahoo board of directors is replaced, according to reports.
Ballmer and billionaire investor Carl Icahn, who has amassed a stake in Yahoo and is actively seeking to oust Yahoo's board, have been in discussions for weeks about restarting merger negotiations.
"Our talks centered on the industry in general but, more importantly, on how Yahoo and Microsoft can do a transaction together," said Icahn in an open letter to Yahoo board members, according to TheStreet.com. "Steve made it abundantly clear that, due to his experiences with Yahoo during the past several months, he cannot negotiate any transaction with the current board."
Ballmer and Icahn would expect a new board to immediately fire Yahoo's chief executive Jerry Yang. Yahoo's board of directors meets on August 1.
Yang responded to Icahn's statement by pointing out that Yahoo approached Ballmer in June about accepting Ballmer's original offer for the search engine, only to be rejected.
"If Microsoft and Mr. Ballmer really want to purchase Yahoo, we again invite them to make a proposal immediately," said Yahoo in a statement. "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."
In January, Ballmer made an unsolicited offer to buy Yahoo for $44.6 billion, but he withdrew the offer in May after Yahoo kept insisting on a higher price. Yahoo's stock price has plummeted 27 percent since Ballmer made his $33-per-share offer.
Analysts say an Icahn-Ballmer pact would certainly appeal to Yahoo shareholders.
"I think Carl's chances are pretty high," said analyst Rob Enderle, according to Agence France Presse. "Microsoft may not want all of Yahoo, but they certainly don't want Google to get part of it."
"Clearly, Microsoft is interested in blocking Google," added Enderle. "There is no love lost between these companies. Google has it in its DNA as a primary goal to put Microsoft out of business."