Carl Icahn, the billionaire activist shareholder, is believed to be considering whether to launch a boardroom coup at Yahoo! to force the internet search engine to restart talks with Microsoft.

Mr Icahn must decide by Thursday this week whether he will exercise his right as a shareholder to nominate other directors to the Yahoo! board.

This month, Microsoft - which had offered $47.5 billion to buy Yahoo! - walked away from the internet company after it threatened to hive off lucrative parts of its business to Google as part of its attempt to thwart a deal.

While Yahoo! is believed to be in bid talks with AOL, the internet business of Time Warner, it is doubtful that investors will have the luxury of voting on any future offer that values their shares at a near 70 per cent premium. It is not known how active talks with News Corporation, the parent of The Times, are. It is also not known whether Microsoft would still be interested in a deal.

Mr Icahn is believed to have been acquiring a stake in Yahoo! since late last week and is now thought to own about 50 million shares in the internet company, representing a 2.5 per cent holding.

The investor - who recently succeeded in forcing Motorola to split into two companies after an eighteen month fight - is thought to be considering whether to nominate three or four directors to the Yahoo! board. Should Mr Icahn pursue such a strategy, he would hope that his own nominated directors would force the rest of the board to re-open talks with Microsoft.

Hopes that Jerry Yang, co-founder and chief executive of Yahoo! may be forced to reconsider an approach from the software giant lifted shares in the internet group by 5 per cent to $26.56. Microsoft made two offers for Yahoo! - the first, made at the beginning of February, valued Yahoo! shares at $31 each, and the second, made this month, valued the stock at $33.

Microsoft had wanted to buy Yahoo! because as a combined company, the two would have been able to compete more aggressively with Google, their larger rival, for internet advertising. The online advertising market is estimated to be worth around $40 billion a year and is expected to double by 2010.

Yahoo! last night declined to comment. It is understood that Mr Icahn has not nominated any directors as yet. Mr Icahn was unavailable for comment.

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