CARL ICAHN launched an all-out assault on the board of Time Warner last night as the billionaire investor hired Lazard, the investment bank, to compile a new slate of directors and to work on a break-up plan for the entertainment and media giant.

Mr Icahn, who owns a 2.5 per cent stake in Time Warner, has been growing increasingly frustrated with the group’s performance and its leadership under the chairman and chief executive, Dick Parsons.

“We continue to believe that Time Warner’s stock is greatly undervalued and that the company is in need of a major restructuring,” Mr Icahn said.

Lazard is expected to draw up a list of new directors, including a possible successor for Mr Parsons, before next year’s annual meeting.

Bruce Wasserstein, Lazard’s chairman and chief executive, said: “Time Warner has a unique set of valuable assets and our assignment is to help determine how best to realise the full value of these assets. We look forward to working with the Icahn Group to help maximise value for all Time Warner shareholders.”

Mr Icahn has attacked the company’s planned $5 billion (£2.9 billion) share buyback as too small, saying that it should be increased to as much as $20 billion. He has also suggested that the company should be broken up, with its cable television division and magazine publishing arm spun off as separate entities. Mr Icahn believes that plans to sell a stake in AOL to Microsoft, Yahoo! or Google could be a mistake.

Lazard is expected to start working on valuation models for a break-up plan to prove Mr Icahn’s point that a sum-of-the-parts valuation of Time Warner will far exceed its present $83 billion market value. Mr Icahn disclosed his dissatisfaction with Mr Parsons and the board in September.

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