Why won't Yahoo part with its search business when Microsoft would be offering a rich amount for it, asks Carl Icahn this morning? The answer could lie in the component of the deal that justifies being offered more than triple its value.

In an open letter to Yahoo shareholders this morning (entire press release available here), Icahn Partners chief Carl Icahn revealed that a deal he attempted to broker over the weekend between Microsoft and Yahoo would have resulted in Microsoft owning more than just Yahoo's search business. The most valuable item on Icahn's list of transferrable assets was not the search division -- that was #2 -- but rather a line-item described as "$12.5B in Asian Assets," valued at $9 per share.

The "search business" -- which Yahoo has repeatedly described as currently inseparable from its technology platform -- was valued at $3.5 billion, or only $2.50 per share. But adding together Microsoft's assumption of Yahoo's current debt, and a repurchasing of some of its outstanding shares, the total bid over the weekend came up to $33 per share. Icahn's letter had no further details about the "Asian Assets" offer.

In a press release early Sunday morning east coast time, Yahoo stated it rejected the latest Icahn proposal, stating that it was only given a day to decide yes or no, and criticizing Icahn's proposed board of directors as having "virtually no working knowledge of Yahoo's businesses."

Icahn's response this morning occasionally resorted to all-caps -- a language familiar to users of Yahoo Instant Messenger -- to make its point: "I believe that, just like the $33 per share offer that was refused by Yahoo in early June, refusing the Microsoft offer for the Yahoo search business is also another grave mistake that will be deeply regretted. Our company is on a precipice and our Board seems ready to take the risk of seeing it topple -- ARE YOU, THE REAL OWNERS OF YAHOO!, WILLING TO TAKE THE SAME RISK?"

Last March, when a deal for Microsoft's outright acquisition of Yahoo was still on the table, analysts perceived the acquisition of Yahoo's Asian businesses, rather than its search technology, as the crown jewel. Yahoo owns a big chunk, though not a majority, of Yahoo Japan. Still, research from Nielsen and others projects Yahoo as a close second to Baidu in search share for that region, with the gap between Yahoo and Baidu actually narrowing and with Google coming in a distant third. Some reports give Yahoo as the overall mobile search leadership position in Japan, handling over half of mobile searches there. Microsoft is barely mentioned in discussions of Asian search, other than with regard to a possible Yahoo deal.

It may be Yahoo's Asian business assets that were the subject of an otherwise cryptically worded portion of that company's statement Sunday morning: "The major component of the overall value per share asserted by Microsoft/Icahn would be in Yahoo's remaining non-search businesses which would be overseen by Mr. Icahn's slate of directors, which has virtually no working knowledge of Yahoo's businesses," the statement reads. The only other business element besides search which Icahn says he was brokering the offer for, was the "Asian Assets" component. Otherwise, what the statement may have meant was that in order to make the deal go through, Icahn's team would end up in charge of the remainder of Yahoo that Microsoft doesn't purchase, which may not be a good fit -- even though Icahn said Jerry Yang would remain on board as "Chief Yahoo."

"In June, Microsoft apparently made a $33 per share offer for all of Yahoo which was met with Yahoo countering at $37, thereby rejecting the $33 offer," Icahn writes this morning. "Amazingly, before Microsoft decided that it would not buy all of Yahoo with this board in place, it offered $33 and was turned down. The Yahoo press release indicates that Yahoo, in rejecting the current Microsoft proposal, stated that it would do a deal in which the entire company was sold to Microsoft for $33 per share. It is hard to understand why it turned down $33 and is now willing to accept it. It is the same obfuscation that is so prevalent in the rest of the press release. DON'T BE FOOLED."

Microsoft's previously stated objections to pursuing a Yahoo deal any further concerned the huge cash guarantees it would have to supply up front. In his letter this morning, Icahn said he managed to convince Microsoft CEO Steve Ballmer to put up a substantial amount anyway:

"After I negotiated with Steve Ballmer for the better part of a week, he agreed to the guarantee," Icahn writes. "He also agreed to commit $7.7 billion dollars to the transaction (consisting of a $1 billion payment for 'Search,' a $2.8 billion loan and a $3.9 billion tender offer to Yahoo shareholders). Under the transaction, Yahoo shareholders would receive $16.25 per share in distributions (consisting of cash and securities) and be left with a content company which would have a minimum guarantee of $2.3 billion per year of 'Search' revenue from Microsoft and cost saving synergies from exiting the 'Search' business that Yahoo has publicly stated would be $750 million per year."

It's Icahn's description of Yahoo's remaining independent component, following the deal, as a "content company" which may have some scratching their heads. Since Yang and newly installed president Susan Decker took over the company last year, their focus has been in moving the core of the company away from content and onto its new Panama advertising platform. While Yahoo will generate some content, the business model relies upon content partners and Yahoo customers to build the content that makes the engine run.

So once again, the characterization of Yahoo from its would-be partner omits what Yahoo considers to be its center of gravity: the advertising platform at the core of its business.

Yahoo Chairman Roy Bostock's portion of Sunday's press release included this: "Clearly, Microsoft, having failed to advance in search, is aligning with the short-term objectives of Mr. Icahn to coerce Yahoo into selling its core strategic search assets on terms that are highly advantageous to Microsoft, but disadvantageous to Yahoo stockholders. Yahoo's Board of Directors will not allow that to happen. Yahoo's Board remains open to any transaction that delivers full value to our stockholders -- we just do not believe such a transaction should be dictated by Microsoft and a single short-term investor."

It's that part of the Sunday statement to which Icahn took particular exception, telling Yahoo shareholders, "Yahoo's press release...[raises] the innuendo that I am on Microsoft's side in this manner. That is patently ridiculous. Since Yahoo failed to consummate a transaction with Microsoft this year, I have spent hours and hours attempting to get the parties together because I believe that it is beneficial to Yahoo shareholders to have a deal with Microsoft and I have worked hard trying to make it happen. It is important to note that my funds and affiliates own 70 million shares of Yahoo and own no shares of Microsoft or Google while the current board outside of Jerry Yang owns only the shares they have received from Yahoo for being directors. My interests are aligned with yours and not Microsoft and I think it is in our interest to have this transaction consummated so that we can get value much in excess of the recent and current market for Yahoo shares."