Redmond, Wash. - Following three months of failed attempts to buy Yahoo (NASD: YHOO), Microsoft (NASD: MSFT) said that it is has resumed talks with the company regarding an alternative "transaction," not involving a full-fledged acquisition. "Microsoft is not proposing to make a new bid to acquire all of Yahoo at this time, but reserves the right to reconsider that alternative depending on future developments and discussions that may take place," Microsoft said in a statement. In response, Yahoo said that it is continuing to consider "a number of value maximizing strategic alternatives."

The Wall Street Journal reported that the proposed deal involves advertisements that run next to Internet search results.

"The move by Microsoft appears to be an attempt to stop Google from entering a search-related deal with Yahoo that's now under discussion and could be announced in coming days," The Journal reported.

Following multiple rejections from Yahoo's board of directors, Microsoft earlier this month pulled its $47.5 billion takeover offer.

Angered by the turn of events, Yahoo shareholder Carl Icahn last week launched a battle for control of the board.

Related Links:
http://biz.yahoo.com/prnews/080518/clsu018.html?.v=1

http://biz.yahoo.com/bw/080518/20080518005102.html?.v=1

http://online.wsj.com/article/SB121114039708401745.html