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http://uk.reuters.com

Option investors bet heavily on Monday that Yahoo might strike a deal of some sort with Microsoft Corp, spurred on in part by pressure from activist shareholder Carl Icahn.

Microsoft has proposed an alternative deal for Yahoo, a complex transaction that would include just buying Yahoo's search business, rather than a full buyout, a person familiar with the discussions said on Monday.

As part of the deal, Microsoft would also buy a minority stake in what remains of the company after Yahoo sells its Asian assets, the source said.

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