MICROSOFT Corp is backing a new management team to take control of Yahoo! Inc's search business following its failed takeover attempt, the Sunday Times of London reported yesterday.

Microsoft will put up US$5 billion to back Jonathan Miller, the former chief executive officer of AOL and Ross Levinsohn, a former president of Fox Interactive Media, the newspaper reported.

The duo would seek to raise an additional US$5 billion from institutional investors to buy a stake of over 30 percent in Yahoo, the Sunday Times said. The terms would give Microsoft a 10-year operating agreement to manage Yahoo's search business, plus a two-year option to buy it for US$20 billion.

Senior directors of the two companies have agreed the outline of the deal, the newspaper said.

A call to Microsoft's press office in Portland, Oregon, by Bloomberg News outside office hours wasn't immediately returned.

An e-mail and phone call outside office hours to Emily Fox, a Sunnyvale, California-based spokeswoman for Yahoo, wasn't immediately returned.