Negotiations have hit a snag between Yahoo and China's Alibaba group, throwing into question the deal for the American Web giant's Asian operations in a tax-efficient asset swap.
According to a Reuters report Wednesday, the deal was "effectively dead in the water" after Yahoo sought unreasonable terms during discussions in Hong Kong. The news agency cited "sources briefed on the situation".
Tech news site AllThingsDigital had reported a snag on Tuesday, and quoted one source as saying discussions "completely halted" after Yahoo's negotiators changed tack on what they wanted from the deal.
It remained unclear what exactly caused the impasse, which comes about two months after basic terms for the deal had been reached.
According to a source quoted by Bloomberg in itsreport, representatives from both sides were set to approach Yahoo's new CEO Scott Thompson to explore an alternative arrangement that would let companies buy back their stakes.
A collapse of the proposed deal for Yahoo's Asian assets would put more pressure on the American company, who has failed to appease its shareholders and turn its business around.
Sources quoted by Reuters said it might still be possible for Yahoo and its Asian partners to hammer out another deal, but this would be taxable.
From previous reports, sources familiar with the deal said Yahoo was considering cutting its 40 percent stake in Alibaba to 15 percent, for both equity and cash.
Alibaba.com last week suspended its shares from trading in Hong Kong, and was reported to have been finalizing terms for a loan from six banks to access about $3 billion, by the end of last week, for the potential buyback.