Yahoo Inc. chief executive Jerry Yang spent months fending off Microsoft Corp.'s unsolicited takeover bid. Now he may only have a few weeks to persuade the software maker to revive its last offer of $47.5 billion US, or risk being fired in a shareholder mutiny, led by activist investor Carl Icahn.

Spurred on by outraged shareholders, Icahn notified Yahoo yesterday that he will lead a revolt to oust Yang and the rest of the Internet company's board unless they renew negotiations with Microsoft. Negotiations fell apart May 3 when the two sides couldn't agree on a price.

To pressure Yahoo, Icahn has nominated an alternate slate of directors to replace the board in an election scheduled July 3 at Yahoo's annual meeting.

To gain leverage in the looming battle, Icahn revealed that he has spent more than $1 billion US, snapping up 59 million shares and options to give him a 4.3 per cent stake in the Sunnyvale-based company. He plans to seek approval from the U.S. Federal Trade Commission to acquire up to $2.5 billion US in stock, including his current holdings.

Icahn's challenge opens a dramatic new chapter in a saga that began Jan. 31 when Microsoft stunned Yahoo with a takeover bid that started out at $44.6 billion US, or $31 per share, and then rose to $47.5 billion US, or $33 per share, earlier this month.

The showdown now features a number of billionaires with diverse agendas: Yang and fellow co-founder David Filo, who believe Yahoo is worth at least $53 billion US; Icahn and basketball team owner Mark Cuban, who has agreed to help shake up the company that made him rich; and Microsoft CEO Steve Ballmer, who viewed Yahoo as a key weapon in his crusade to topple Internet search and advertising leader Google Inc.