Microsoft on Monday said it would be willing to reopen talks to buy all or part of Yahoo, but only if a new Yahoo board is elected, a major boost for investor Carl Icahn's board slate.

Microsoft, which broke off talks in early May to buy the Internet company for $47.5 billion, said it would enter into talks immediately if a new board were elected at Yahoo's (NASDAQ: YHOO) Aug. 1 stockholder meeting.

Billionaire financier Icahn, a major Yahoo shareholder who is running a slate of candidates to replace the Yahoo board, said in an open letter released on Monday that he had spoken frequently with Microsoft (NASDAQ: MSFT) CEO Steve Ballmer over the last week.

"Steve made it clear to me that if a new board were elected, he would be interested in discussing a major transaction with Yahoo," Icahn said.

He said the transaction could including either an outright purchase of Yahoo or purchasing its search business with large financial guarantees -- a deal that the two Internet giants have also discussed in the past.

Microsoft said it would be premature to discuss details, such as the price it might offer for Yahoo. It's latest offer was $33 per share, but Yahoo demanded $37.

The news sent Yahoo shares up more than 10 percent in early trading on NASDAQ, up $2.22 to $23.57. Microsoft shares were up 29 cents to $26.27.

Icahn has been highly critical of the Yahoo board and its CEO Jerry Yang in recent months, claiming the company "botched" negotiations with Microsoft.

The financier has said he would immediately move to replace Yang if his board slate were elected at the August meeting.

Yahoo, for its part, has said that Icahn's efforts show a "significant misunderstanding of the facts" surrounding the negotiations with Microsoft.

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