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SEATTLE (Reuters) - Microsoft (MSFT.O: Quote, Profile, Research) said on Sunday it has reached out to Yahoo (YHOO.O: Quote, Profile, Research) about an alternative deal that would not involve a full acquisition, in a move that could save the web pioneer from fighting a proxy battle with financier Carl Icahn.

Microsoft said it was not proposing to make a new bid to buy all of Yahoo "but reserves the right to reconsider that alternative" depending on discussions with Yahoo, shareholders of Yahoo or Microsoft, or other third parties.

Microsoft did not disclose the nature of its contact with Yahoo in a short statement it issued "in light of developments" since the company withdrew its Yahoo bid two weeks ago.Microsoft said it is continuing to explore and pursue alternatives to improve and expand its online services and advertising business.

SOURCE REUTERS

http://uk.reuters.com/article/internetNews/idUKWEN581220080518