Yahoo, with a market value of about $20 billion, is being courted by a number of potential buyers and is readying its financial pitch books for potential buyers.
Potential buyers include Providence Equity Partners, Hellman & Friedman and Silver Lake Partners, as well as Chinese e-commerce giant Alibaba and Russian technology investment firm DST Global, sources told Reuters.
According to the same sources, Microsoft may look for a partner to go after Yahoo.
Yahoo shares jumped to $15.92 on the news to close 10.1% higher on Nasdaq, but fell back to $15.34 in after-hours trading and Microsoft shares ended 2.2% higher at $25.89.
After ousting Carol Bartz as CEO in early September, Yahoo said it was looking at strategic alternatives after receiving interest from a number of parties.