In papers filed with the US Securities & Exchange Commission ahead of a showdown for control of Yahoo at its Aug. 1 shareholder meeting, Icahn said his nine-member alternative slate of directors still seeks a friendly deal with Microsoft.
However, he called on Microsoft not to consider any alternative transaction short of an outright merger unless it can ensure Yahoo's stock price reaches a level of $33 a share or higher. This was the price Microsoft offered Yahoo in early May which was rebuffed by Yahoo, ending full-out merger talks.
The shareholder activist also reiterated plans to hire a "talented and experienced CEO" to replace Jerry Yang as CEO and return him to his previous role as "Chief Yahoo" -- executive without portfolio and public cheerleader for the company.
Yang, who co-founded Yahoo in 1994, was elevated a year ago this month to replace outgoing CEO Terry Semel.
Icahn says his group beneficially owns 68.8 million shares, or 4.98 per cent of Yahoo's outstanding shares.