Verizon Communications is known to have come under a strategic procurement deal worth $5bn (£3.8bn) with Yahoo’s search and advertising operations though the company denied commenting on the gossips.
A formal announcement is expected today before US markets open for trading.
Over the last few years Yahoo has struggled to keep up with the changing internet advertising landscape, with some analysts arguing that it has failed to remain relevant in many of its core markets.
With the changing digital and consumer landscapes online, Yahoo was becoming primitive to cater the demands and treading in innovation, though the rest of the work was done by Google and Facebook.
The much talked, Marissa Mayer, Yahoo’s chief executive, is not expected to join Verizon, but she is due to receive a severance payout worth about $57 million, according to Equilar, a compensation research firm.
Founded in 1994, Yahoo was one of the last independently operated pioneers of the web. Many of those groundbreaking companies, like the maker of the web browser Netscape, never made it to the end of the first dot-com boom.
Last week the firm reported a $440m loss in the second quarter, but said the board had made “great progress on strategic alternatives”.