As part of a complicated deal, Yahoo would spin off its Asian assets, which include a stake in the Alibaba Group, a Chinese Internet company, these people added.
The proposal, which is subject to change, is an effort by Microsoft to scuttle a search-related advertising deal between Yahoo and Google, and could expand into a full-scale takeover.
People involved said the talks were in a preliminary stage, and they added that Yahoo could still proceed with its deal with Google.
That deal calls for Yahoo to display some Google ads on its search pages. However, any deal between Yahoo and Google is likely to face antitrust scrutiny, and Microsoft is expected to lobby against such a transaction.
Spokesmen for Yahoo and Microsoft declined to comment.
Details of the negotiations were first reported by Reuters.
Under a shareholder agreement between the Alibaba Group and Yahoo, Alibaba would have first rights to buy back Yahoo’s stake if Yahoo decided to sell it, or if Yahoo itself were acquired.
Since Microsoft made its initial offer in January, Alibaba has been lining up investors in the event that this opportunity arose, according to people with knowledge of its plans.