Update: The Times article was inaccurate, and sources now say there is no deal in the works.

The Times Online is reporting that Microsoft is set to close a deal to get operating control of Yahoo’s Search business over a 10 year period by paying $5 billion cash to buy convertible preferred shares and warrants giving Microsoft more than 30% control. Under the plan, Microsoft can also exercise its option to buy the Yahoo Search division for $20 billion. The option would expire in 2 years. There is no confirmation from either company. I first reported that ex Yahoo CEO Jerry Yang was still interested in a Microsoft buy-out, and that Microsoft was now only interested in doing a search partnership of some sort. More recently, Google also backed off from a Yahoo Ad deal. There is no other information available under the new possible Microsoft Yahoo Search acquisition. Via