San Francisco  - Internet services company Yahoo said Monday it had struck a compromise deal with major shareholder Carl Icahn giving him and his associates three seats on the board.

In exchange, Icahn is to withdraw the list of candidates he has put up to replace the entire board.

The agreement comes before Yahoo's annual general meeting on August 1 that had threatened to see an escalation of the conflict.

Icahn has backed a takeover of Yahoo by the world's largest software concern, Microsoft. Yahoo's board has rejected a Microsoft bid of 47.5 billion dollars. (dpa)