By Jessica Toonkel and Sai Sachin R
(Reuters) - Time Inc (N:TIME), the publisher of Sports Illustrated, People and Time magazines, has been exploring a bid to acquire the core internet business of Yahoo Inc (O:YHOO) for several weeks, a source familiar with the situation told Reuters on Tuesday.
Time Inc has been reaching out to bankers on pursuing a deal with Yahoo, according to the source, who wished to remain anonymous because they were not permitted to speak to the media.
It is unclear if the company has retained an investment bank as financial advisor on the potential bid. Yahoo officially launched the sale of its core business, which includes search, mail and news sites, last week.
Time Inc could pursue a Reverse Morris Trust transaction with Yahoo, a tax-free deal in which one company merges with a spun-off unit, Bloomberg reported earlier on Tuesday. Yahoo Chief Executive Marissa Mayer would not be part of the company under such a deal, Bloomberg reported, citing one of its sources.
Time Inc has heard a presentation from Citigroup Inc (N:C) bankers on pursuing a deal with Yahoo, the Bloomberg report said, adding that Citigroup had not been retained by Time. (http://bloom.bg/1mUM7lQ)
Time Inc and Yahoo declined to comment on the Bloomberg report while Citigroup could not immediately be reached for comment.
Verizon Communications Inc (N:VZ), which already owns Internet pioneer AOL, has already publicly expressed interest in Yahoo's core business.
Time Inc, which has seen print advertising dollars dry up in recent quarters, has been trying to boost its digital presence through acquisitions of online properties. Time Inc said earlier this month it would buy social networking pioneer MySpace.
Earlier this month, the magazine publisher reported a bigger-than expected drop in fourth-quarter profit, hobbled by a strong dollar and a drop in income from print ads, and said ad revenue would likely be flat or fall in the current quarter.
The company also said it would buy advertising company Viant as it seeks to boost revenue from its digital properties.
Time Warner Inc (N:TWX) spun off its publishing business Time Inc in 2014 to focus on its more profitable broadcasting businesses.
Time Inc shares were down 2.5 percent at $13.97 in afternoon trading. Yahoo shares dipped about 1 percent to $30.88.