Billionaire investor Carl Icahn confirmed that he will use the muscle behind his 59 million share stake in Yahoo! to trigger a proxy battle aimed at displacing the company's board of directors with one that is more amenable to a sale to Microsoft. Icahn sent a letter to Yahoo!'s board Wednesday demanding that the company re-open talks with Microsoft.

"It is clear to me that the board of directors of Yahoo has acted irrationally and lost the faith of shareholders and Microsoft," Icahn wrote in his letter to the Yahoo! board. "It is quite obvious that Microsoft's bid of $33 per share is a superior alternative to Yahoo's prospects on a standalone basis. It is unconscionable that you have not allowed your shareholders to choose to accept an offer that represented a 72 percent premium over Yahoo's closing price of $19.18 on the day before the initial Microsoft offer. "

"A number of shareholders have asked me to lead a proxy fight to attempt to remove the current board and to establish a new board which would attempt to negotiate a successful merger with Microsoft, something that in my opinion the current board has completely botched," the letter continues.

What Icahn is seeking is simple: Yahoo! should immediately contact the software giant and accept Microsoft's previous $47.5 billion, $33-per-share offer for the company. If it does not, Icahn has formed a 10-member rival board to replace Yahoo!'s current board of directors. Once in place, he says, this board will then restart talks with Microsoft.

Icahn has also sought regulatory clearance from the US Federal Trade Commission (FTC) to purchase an additional $2.5 billion worth of Yahoo! stock. He has also contacted Microsoft about his plans, though the software giant has allegedly not responded. That, obviously, is a problem for Icahn: Without Microsoft's interest, it's unclear what the point is in trying to oust Yahoo!'s board.