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The Sunday Times, which did not cite its sources, said the proposal under discussion involves a complex transaction that would see the U.S. software giant support a new management team to take control of Yahoo.
The team would be led by ex-chairman and chief executive of AOL Jonathan Miller and former Fox Interactive Media president Ross Levinsohn, the report said.
But the AllThingsDigital blog, affiliated with the Wall Street Journal, quoted Levinsohn as saying the report was "total fiction." Top sources at Yahoo and Microsoft also scoffed at the report, said the blog.