Read the report from the United States Securities and Exchange Commission

Jerry Yang, the chief executive of Yahoo!, has managed to avert a bloody boardroom coup at the internet search engine he founded by offering three board seats to Carl Icahn, the billionaire who had plotted to oust all the directors of the company on August 1.

Mr Icahn, who holds a 4.98 per cent stake in Yahoo!, yesterday joined the internet company's board as a non-executive. Two of his own choice of nominees will be appointed to the board of the company. In return for the board seats, the activist shareholder has agreed to withdraw plans to press for the dismissal of the whole board at the group's forthcoming annual meeting.

Mr Icahn, 72, gained an agreement from the existing board that any offer presented to Yahoo! to sell all or part of the company must be “fully discussed with the entire board before any final decision is made”.

Mr Icahn has been trying to force the Yahoo! board to effect some kind of sale to Microsoft. He was livid when the Yahoo! board failed to allow shareholders to vote on whether to accept any of the three offers tabled by Microsoft over the past six months to buy the internet search engine.

In a statement, Mr Icahn said: “I continue to believe that the sale of the whole company or the sale of its search business in the right transaction must be given full consideration.”

Investors were happy that one of the people Mr Icahn proposed for the board was Jonathan Miller, the former chairman and chief executive of AOL, the internet unit of Time Warner. Mr Yang countered approaches from Microsoft by initiating talks with other media companies, such as News Corporation, parent of The Times, and Time Warner AOL. AOL and Yahoo! are believed to be discussing a merger.

In late January, Microsoft made a $42 billion cash-and-shares offer for the search engine, which valued the group at a 62 per cent premium. Yahoo! rejected the offer. Four months later, Microsoft raised its offer by $5 billion, but was rejected again. Yesterday, shares in Yahoo! closed at $21.67, down more than 3 per cent on the day and well below the $33 per share offer made in May.

Microsoft declined to comment. Mr Icahn failed to return calls.

The Yahoo! deal

— Carl Icahn agrees to abandon his attempt to oust the Yahoo board on Aug 1
— Icahn receives a seat on the board, and two for his nominees
— Jerry Yang agrees to put any “transactional” deals to the new-look board

Icahn battles

2008
— April Forces BEA Systems to sell to Oracle
— March Succeeds in forcing Motorola demerger

2007
— Sells stake and walks away from Genzyme (believed to have plotted break-up)
— Forces Lear to accept $2.3bn offer from his American Real Estate group
— CEO of Blockbuster quits under pressure from Icahn

2006
— Fails to force break-up of Time Warner-AOL
— Manages to secure chairmanship of ImClone

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