Yahoo is about to close a deal for combining its operations with Time Warner Inc.'s AOL unit in effort to contend Microsoft's $44.6 billion takeover offer.

Once the deal is complete, Yahoo will gain control of AOL and receive investment from Time Warner, and give up a 20 percent stake in the combined entity.

Yahoo's chief, Jerry Yang is trying to find alternatives to Microsoft's $31-a-share bid.

As part of finding alternatives to Microsoft's bid, Yahoo said yesterday it would display some Web search advertising links sold by Google Inc., in an effort to convince investors that it can remain as an independent company.

There were speculations that News Corp. was in talks to Join Microsoft's bid for Yahoo, a deal which would combine Yahoo, Microsoft's MSN and News corp.'s MySpace.

Yahoo shares gained 2 percent to $27.77 on the Nasdaq Stock Market.

Time Warner, the world's largest media company declined by 4 cents to $14.43 in New York Stock Exchange composite trading.

Microsoft shares declined by 2 cents to $28.87.

Microsoft CEO, Steve Ballmer is hoping to challenge Google's dominance of the $41 billion online ad market through the acquisition of Yahoo.

According to ComScore Inc., a research company, Yahoo ranks second while AOL is the fourth most used Internet search engine in the U.S., all behind Google which is the most popular.

A report from ComScore showed that Google attracted 59.2 percent queries in February; Yahoo had 21.6 percent, followed by Microsoft with 9.6 percent and AOL with 4.9 percent.