Tech Crunch says the deal "absolutely hinges on [Microsoft's] involvement" in the form of financing the bulk of the nearly $20 billion price the Valley group is proposing to offer for Yahoo.

That's 20 percent above where the beleaguered Internet company was trading before this news. Shares were down substantially but spiked when the story broke. Yahoo shares were trading at $12.72, down 28 cents, 2.2 percent, at 3:25 p.m. on the Nasdaq. Microsoft shares were at $19.60, down $1.16, 5.6 percent, at the time.

I'm seeking a comment from Microsoft and will update as soon as I can.

Regarding the terms of the would-be sale of Yahoo's search assets to Microsoft, Tech Crunch says it would go something like a proposal Microsoft floated in last June, namely:

Microsoft pays $1 billion and a guaranteed higher cost-per-click rate to Yahoo in exchange for the whole Yahoo search business: "servers, code, advertisers, third party publishers, intellectual property and employees (perhaps 3,000 of them)." Tech Crunch described other contours of that proposal here. By the way, Michael Arrington said then the deal "stinks." Microsoft is "just getting [Yahoo] pregnant, setting her up in a nice apartment and telling her not to talk to any other guys."