Late today, reports surfaced that Carl Icahn acquired up to 50 million shares in Yahoo.

According to the reports, Icahn is considering mounting a proxy fight to take control of the board of directors at Yahoo.

Shares of Yahoo were up more than 5% in afternoon trading, after having been down over $1 a share earlier in the day.

Shareholders have until Thursday to nominate a board of directors. The election is on July 3, 2008 when all 10 of Yahoo!’s board of directors are up for election.

The question is now whether Icahn can convince enough shareholders to nominate a slate of director that would favor a sale to Microsoft and whether Microsoft would still be interested in buying Yahoo for $33 a share.

Icahn would need at least a 5% stake of Yahoo’s shares to run a proxy fight. Some major Yahoo shareholders have signaled they’d be willing to back a hedge fund activist to lead a campaign to bring Microsoft back. Microsoft raised its offer from $31 to $33 in the final days before walking away.

However, one major shareholder, Eric Jackson, who last week threatened to run a proxy campaign to elect new board members at the company, announced before the Icahn report came out that he has canceled plans saying he couldn’t raise the money for a proxy campaign.