Yahoo may team up with News Corp. to fend off Microsoft's bid to buy the struggling Web portal, according to a Wall Street Journal report on Wednesday.
The two companies are in talks about a deal in which News Corp. would take a stake of as much as 20 percent in Yahoo. MySpace and other Web properties of News Corp. would be combined with Yahoo, according to the report, which was attributed to "people familiar with the matter."
The deal would also involve a cash infusion by News Corp. and a private equity firm. Yahoo would remain independent.
On Monday, Yahoo rejected Microsoft's $US44.6 billion unsolicited buyout bid, saying it undervalued the company. Microsoft has vowed to take all necessary steps to close the deal.
A Yahoo spokeswoman declined to comment on the report. News Corp. and Microsoft could not immediately be reached for comment.