The two companies are understood to be holding informal talks between their bankers, shareholders and certain board members to see if they can come to an agreement regarding Microsoft's takeover plans, according to reports.
The deadline Microsoft imposed on to enter into takeover talks passed last weekend without any movement towards a deal.
Microsoft had threatened to make a hostile takeover bid, if the deadline passed, for less money than the $44.6bn (£22.5bn) it had initially offered when it first proposed a takeover deal for Yahoo! back in January.
However, the software giant's plan to get shareholders to oust the present board at Yahoo! and install its own directors would likely lengthen the takeover process and cause bad feeling among Yahoo! staff.
, although it says that it is not opposed in principle to a deal with Microsoft.
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