In the letter, Yahoo's board of directors slammed Icahn for what it calls a 'smoke and mirrors' plan to run the company and facilitate a sale to Microsoft.
"We believe the Icahn slate and agenda present significant risk to your investment in Yahoo," the board told its shareholders.
"We believe you cannot count on Microsoft to bail out Mr. Icahn's misguided agenda, at least not on terms that are in the best interests of Yahoo stockholders."
The letter portrayed Icahn as being short-sighted and unfit to run the company. Board members accused the investor of buying Yahoo stock only to make a quick buck off the sale of the company.
The letter comes just weeks before Yahoo shareholders are set to vote on Icahn's plan. If approved, the investor activist has promised to completely replace Yahoo's board of directors and secure a sale of some or all of the company.
Microsoft, which had previously ruled out any new deal with Yahoo, said that it would come back to the table should Icahn take charge of the board.
Yahoo's current board noted that Icahn has had little involvement in the technology industry, and the letter claims that he may not even be able to run the company long enough to facilitate the Microsoft sale.
"First, they do not have the detailed knowledge to negotiate a complex restructuring of a large, innovative high technology company in a rapidly changing environment," the letter said of Icahn's takeover team.
"Second, they do not have the hands-on experience to manage and lead Yahoo during the approximately one year period estimated to be required to gain regulatory approval for a deal or to manage and lead the remainder of the company (non-search) after a transaction is completed."
The board said that it would still be willing to sell to Microsoft for a flat $33 per share price. The letter also suggests that the board would be open to negotiating a deal to sell only the search business or spin off other parts of the company, but such a transaction would involve 'substantial execution and operational risks.'
"These are steps Yahoo could take, if we determine they are feasible and in our stockholders' best interests, without any "help" from Microsoft or Mr. Icahn," the letter concluded.
"But they are complex steps that require care and prudence."
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