AOL has reportedly hired financial advisers to help it analyse a strategic tie-ups deal with Yahoo.
Citing unnamed sources, The Wall Street Journal claims that AOL has not approached Yahoo with a tie-up proposal but is going over it with hired financial advisers.
The company is said to be considering other options if the Yahoo deal doesn't come through.
The options proposed by the financial advisers include merging Yahoo and AOL's online business and spinning off Yahoo's Asian assets in order to return capital to shareholders.
Another option on the table is to purchase a stake in the combined options and pay dividends to Yahoo shareholders.
Yahoo is yet to confirm the claims, but a company source has told Reuters that it is not currently reviewing any proposals of this nature.
Reuters had previously reported that major investment houses had approached companies like AOL and News Corp. to show some interest in buying Yahoo.
A possible acquisition will involve Yahoo having to give up its Asian assets, including a 40 per cent stake in Alibaba and 34.5 per cent share in Yahoo Japan.