Updated: Icahn: Yahoo’s Google Deal ‘Might Have Merit’, ‘May Be Better Than Microsoft’

imageCould Carl Icahn have actually been placated by Yahoo’s picking Google over his favoured candidate, Microsoft? The proxy marshall told Reuters, in what the newswire said were his first comments since the purply one opted for a Google (NSDQ: GOOG) ad-deal rather than a Microsoft (NSDQ: MSFT) buy-out: “While the Google deal is not the same as an offer of $34.375 per share for Yahoo (NSDQ: YHOO), I am continuing to study it, and it might have some merit.”

“I continue to be extremely disappointed with the Yahoo management, but the Google deal might have some merit and seems to be better then the alternative deal proposed by Microsoft.” Better only than the scaled-back Microsoft option, of course.

“Disappointing” Icahn would hardly rank amongst the biggest regrets for Yang & Co., though the billionaire financier declined to say whether his proxy battle to replace the board would continue. With these more positive noises, and Google deal’s “change in control” provisions, however, appear to have assuaged the threat for now…

Reuters: “Icahn hinted that the change of control provision might be sufficient reason to pull back on his campaign to replace the Yahoo board. Alternatively, Icahn could accept minority board representation which may not prompt Google to walk away.” If Icahn were to seek a bigger stake, it could prompt Google to walk away, leaving him to renew Microsoft talks.

Update: As Icahn’s position weakens, it seems his support is getting soft. Angry shareholder Eric Jackson is now pushing for a compromise slate, according to Reuters. He says that while he supports Icahn, it’s clear that not all shareholders do, and so the best may be some sort of mixed board, with four directors coming from Icahn. Said Jackson: “We must accept that reality and select a board to do the best job in the current situation (even as distasteful as the situation is).”