Blodget Blasts Icahn Over Yahoo Flap

And now, the gloves come off.

Silicon Alley Insider‘s Henry Blodget writes that—see if you can follow this—a source close to Yahoo, a source close to Microsoft, and Carl Icahn all disagree about a central piece of the search proposal that Yahoo rejected over the weekend: whether or not Icahn would be given control of Yahoo.

As Blodget says, this part was really important because it “was an obvious deal-killer.” How did we get to this point? Blodget gives a play by play of what went down over the weekend and then summarizes it for us:

Yahoo_CEO_Yang.jpg“Here’s what we think happened: We think Carl Icahn’s personal agenda screwed up what otherwise might have been a reasonable search offer from Microsoft. (This is one hazard of having a deal-broker who also has major skin in the game.) We think Microsoft has since recognized this and is running as far from Carl as it can.

“Microsoft does not care about anything but Yahoo’s search business,” Blodget continued. “All of the other terms in the convoluted proposal—dividends, tender offers, Asian assets, loans, etc.—are just a sop to Carl Icahn and other Yahoo shareholders still annoyed about the blown merger deal. These terms are obscuring a Microsoft search offer that is starting to get interesting.”