The Wall Street Journal, citing unnamed individuals said to be familiar with the plan, reported that Silver Lake Partners and Blackstone Group were among the private equity firms that could team up with AOL to buy out Yahoo.
The newspaper said the discussions were very preliminary. Yahoo and AOL have not publicly commented on the report.
Yahoo's shares, priced at $17.09 early Thursday, have been on a roller coaster for the past couple of years as the company engaged in an on-again, off-again courtship with Microsoft. Microsoft made several attempts to purchase Yahoo outright, but ended up striking a partnership with the company.
Under the ten-year pact, announced in July, 2009, Microsoft has placed its Bing search engine on all Yahoo sites and, initially, keeps 12% of the revenue from Yahoo-driven searches. Yahoo is handling sales and marketing for premium search ads for both its properties and Microsoft's.
Yahoo can terminate the arrangement if search traffic generated by the alliance falls below a specified percentage of rival Google's traffic. Yahoo also retains the right to expand the partnership by adding Microsoft's mapping and mobile search services to its Web properties.
One complication of any deal involving Yahoo and AOL is that AOL's search tools are in part powered by Microsoft rival Google. One possibility is that AOL could also turn to Microsoft's Bing search engine if it ties up with Yahoo.
Microsoft, Yahoo, and AOL would together control about 30% of the U.S. search market, compared to Google's 65.4% stake, according to the latest figures from market watcher Comscore.