Report: Icahn Zeroes in on Yahoo!

Updated from 4:40 p.m. EDT

SAN FRANCISCO -- Shares of Yahoo!(YHOO Quote) climbed Tuesday on news that billionaire activist investor Carl Icahn may be considering a proxy fight.

The stock rose 5.2% to $26.56 after CNBC reported that Icahn is planning to launch a proxy fight in time for Yahoo!'s annual shareholder meeting scheduled for July 3.

Shareholders have until Thursday to nominate a board of directors. Yahoo! had been stalling on setting a date for its meeting after Microsoft(MSFT Quote) threatened to replace the Internet giant's board with its own slate of candidates.

Now that Microsoft's $47.5 billion merger offer is off the table, Yahoo! is trying to avoid a shareholder-initiated proxy fight. With a 10-day window to nominate a board, shareholders have little time to put together a slate.

Many investors had expressed anger at Yahoo! for failing to reach a deal with Microsoft. Microsoft's last offer to Yahoo! was $33 a share, short of the $37 a share that Yahoo! Chief Executive Jerry Yang had been requesting.

All 10 of Yahoo!'s board of directors are up for election on July 3. Activist shareholder Eric Jackson, who had been urging Yahoo! to accept a deal with Microsoft, is calling for shareholders to unseat the board by withholding their vote.

According to CNBC, Icahn began building a significant position late last week in Yahoo!, as much as 50 million shares, according to its sources. That would represent 3.6% of the outstanding shares in Yahoo!