Yahoo announced on Monday that it has reached an agreement with corporate raider Carl Icahn ending his effort to oust the Internet giant's board over its handling of a takeover bid from Microsoft.

Under the deal, Icahn, who owns around five per cent of Yahoo common stock, has agreed to withdraw his nominees for the consideration at the board's annual meeting on August 1, 2008 and will get a seat on the board, Yahoo said in a statement.

"I am very pleased that this settlement will allow me to work in partnership with Yahoo's board and management team to help the Company achieve its full potential," Icahn said in the statement.