Rupert Murdoch’s News Corporation is in talks with Yahoo about combining MySpace and its other websites with the search engine giant. The move has been reported in the press as an attempt to scuttle the unsolicited $44.6bn (£22bn) Microsoft takeover bid of Yahoo.

Under the deal, News Corp would win more than a 20 per cent stake in Yahoo, according to reports. The deal would keep Microsoft from acquiring Yahoo, while giving News Corp control over a large number of internet properties and advertising markets. On Monday, the Yahoo board turned down Microsoft's offer, saying it undervalued the company.

The deal would also include some cash from News Corp and a private equity firm, according to a report in the Wall Street Journal. The deal is similar to one the two companies discussed over the past 18 months, but the talks fell apart over disagreement on the value of MySpace. News Corp is expected to value MySpace at $6bn to $10bn (£3bn to £5bn), the Journal said, quoting unnamed sources.

A Yahoo spokesperson said: "Our board is continuing to carefully and thoroughly evaluate its strategic options and is committed to pursuing initiatives that maximise value for all stockholders."

News Corp could not be reached for comment. Microsoft declined to comment.