Microsoft to reopen talks with Yahoo if it replaces its board

"We confirm ... that after the shareholder election Microsoft would be interested in discussing with a new board a major transaction with Yahoo, such as either a transaction to purchase the 'Search' function with large financial guarantees or, in the alternative, purchasing the whole company," Microsoft said in a statement.

Microsoft said "it would be premature to discuss at this time important details such as the price or other terms of a possible transaction."

The statement added: "We respect the right of Yahoo's shareholders to determine the destiny of their company, and we do not intend to engage in ongoing commentary on these issues in advance of Yahoo's shareholder meeting."

Icahn made his comments in an open letter to Yahoo shareholders nearly a month after the California company said negotiations on a tie-up with Microsoft were apparently dead.

The US billionaire, who has amassed a stake in Yahoo and is seeking to oust the company's board, said he had in the past week "spoken frequently" with Microsoft chief executive Steve Ballmer and others at the world's biggest software firm.

"Our talks centered on the industry in general but, more importantly, on how Yahoo and Microsoft can do a transaction together" Icahn said.