WASHINGTON--Billionaire corporate raider Carl Icahn announced plans Thursday to launch a bid to replace the board of Yahoo, saying the Internet firm had "completely botched" merger talks with Microsoft.

Icahn said in an open letter to the Yahoo board that he had acquired 59 million shares of Yahoo and had formed a 10-person slate which will stand for election against the current board.

"It is unconscionable that you have not allowed your shareholders to choose to accept an offer that represented a 72-percent premium over Yahoo's closing price of $19.18 on the day before the initial Microsoft offer," Icahn said in the letter.

He added that he is seeking antitrust clearance to buy as much as $2.5 billion worth of Yahoo shares.

"I and many of your shareholders strongly believe that a combination between Yahoo and Microsoft would form a dynamic company and more importantly would be a force strong enough to compete with Google on the Internet."

He added that in the past week, "a number of shareholders have asked me to lead a proxy fight to attempt to remove the current board and to establish a new board which would attempt to negotiate a successful merger with Microsoft, something that in my opinion the current board has completely botched."

Icahn said a combination between Microsoft and Yahoo "is by far the most sensible path for both companies."

The 72-year-old Icahn, an activist shareholder who has targeted companies ranging from airline TWA to General Motors, was ranked number 46 by Forbes magazine in its list of global billionaires, with a net worth of $14 billion.

Earlier this month, Microsoft, the world's biggest software company, yanked its proposal for Yahoo, saying the struggling Internet pioneer refused to budge despite the software giant upping its offer to nearly $50 billion.

Talks aimed at resolving corporate dueling that began with Microsoft's offer on February 1 to buy Yahoo for $31 per share ended with the two firms unable to close a multibillion-dollar gap in price expectations.

Microsoft's bid would have brought together the world's biggest software firm and second-largest Internet search firm in a bid to better compete with Google, which has been gobbling up an increasing share of the lucrative Web search market.

Icahn said in his letter: "It is clear to me that the board of directors of Yahoo has acted irrationally and lost the faith of shareholders and Microsoft."

He added: "It is quite obvious that Microsoft's bid of $33 per share is a superior alternative to Yahoo's prospects on a standalone basis. I am perplexed by the board's actions. It is irresponsible to hide behind management's more than overly optimistic financial forecasts."

Icahn said he was concerned by news that Yahoo's current management wants to pursue "strategic alternatives" and urged against any move that "might in any way impede a future Microsoft merger."

"I sincerely hope you heed the wishes of your shareholders and move expeditiously to negotiate a merger with Microsoft, thereby making a proxy fight unnecessary," he said in his letter.

The slate proposed by Icahn includes, in addition to himself: Lucian Bebchuk, a professor of corporate governance at Harvard Law School; Frank Biondi, a former CEO of Viacom and current head of investment firm WaterView Advisors; and Mark Cuban, owner of the Dallas Mavericks basketball team.