U.S. telecom giant Verizon Communications is set announce on Monday plans to buy Yahoo's search and advertising operations for about $5 billion.
Yahoo, which introduced many users around the world to the Internet, announced in February that it was looking at "strategic alternatives" for its core Internet business.
Over the last few years Yahoo has struggled to keep up with the changing Internet advertising landscape, with some analysts arguing that it has failed to remain relevant.
Chief executive Marissa Mayer, who came from Google to take the helm in 2012, has made little progress in returning the company to profit. Last week the firm reported a $440 million loss in the second quarter.
The reported price tag for the deal is well below the firm's $125 billion market value at the height of the dot.com boom. In 2008, Yahoo spurned a $44 billion bid from Microsoft.
The deal would allow Yahoo to separate its main assets from its holdings in Chinese Internet giant Alibaba, which accounts for most of Yahoo's $37 billion market value. It will also allow Verizon to integrate Yahoo with another online acquisition, AOL, to create a digital group capable of taking on the likes of Google and Facebook.
The sale is expected to be announced Monday before the U.S. financial markets open.