One of the biggest stories in the business world right now is involving Carl Icahn and his plan to get Yahoo, but what does this ‘proxy battle’ really mean?

Here’s a little background: Microsoft said ‘Peace out’ to Yahoo last week after Yahoo CEO, Jerry Yang, and his posse rolled up to Microsoft CEO, Steve Ballmer’s house looking for $37 per share instead of the proposed $33 for their merger deal. As we all know now, that was a case example of how not to pull off a major takeover deal.

Now enter Carl ‘The Corporate Raider’ Icahn. This guy is well known for being both the 46th richest man in the world and also a very good corporate takeover powerhouse. In the past he’s been involved in Blockbuster, ImClone, Marvel Comics, Time Warner, and more recently Motorola. But, he’s attempting one of his biggest magic tricks ever with these Yahoo talks.

Icahn was watching the Microsoft/Yahoo deal with a lot of anticipation last week, and was super pissed when Yahoo screwed it all up. He wrote a letter to Yahoo and their shareholders telling them off in some pretty harsh language. According to a MarketWatch article:

Icahn blasted the current board, accusing them of acting “irrationally” and having “completely botched” negotiations with Microsoft over the software giant’s blockbuster merger offer.

This guy does not mess around.

Yahoo responded by saying that old man Icahn was a little confused on the details. Apparently all the talk of a $33 offer was only that, talk. There was no deal on the table for Yahoo to sign. It’s obvious that Yahoo does not seem happy about the proposition of Icahn getting involved in all this.

But it really doesn’t matter to Carl what they think. He believes the battle is on, and he put his money where his mouth is by purchasing 59 million shares of Yahoo in the past 10 days. Icahn is also looking to increase that to $2.5 billion worth of the stock with the current stock price sitting around $27.

Icahn is sending the signals that he is preparing for a ‘proxy battle‘ for the company. Simply put, he is attempting to either convince or buyout the majority of the shareholders of the company so that he can appoint a new board of directors.

It gets even better. Icahn submitted his ‘list’ of future board members for when he takes over Yahoo and on that list is none other than Mark Cuban. Many people may know him nowadays as the loud owner of the Dallas Mavericks who dresses very casually and competed on Dancing With The Stars.

But back in the heady days before the dot com burst, Cuban sold his company, broadcast.com to Yahoo for a staggering price of $5.1 billion. He is considered one of the ultimate pitchmen for somehow pulling off that deal. It turned out to be a huge bust for Yahoo and they never did anything significant with their purchase.

How weird would it be if Mark Cuban was back in the driver’s seat and pulling the strings on another big deal involving Yahoo? I guess Carl Icahn really wants this guy in the corner when it comes down to making a deal stick with Microsoft.

MarketWatch: Icahn reveals plan to take over Yahoo board, May 15, 2008

Slate: What’s A Proxy Battle, April 9, 2008

MarketWatch: Mark Cuban Comes Back To Haunt Yahoo, May 15, 2008