• BoomTown, Friday, October 8, 2010 2:17 PM

Word in the Valley is that Yahoo is desperate for a "transformative" acquisition to revive the reeling company. But don't look at AOL or Demand Media, sources tell BoomTown's Kara Swisher. Rather, the once reigning Web portal has its heart set on ecommerce, and group buying site Groupon in particular.

"Sources said Yahoo has been eying it for possible acquisition, which would put it smack dab in the hot space around local purchasing and consumer information," Swisher reports. Still, Groupon investors would like to stay independent, according to sources, and few could argue that any affiliation with Yahoo is an uncertain endeavor. Also, such a deal wouldn't come cheap as Groupon was recently valued a well above $1 billion. Needless to say, Yahoo "could use something interesting right about now," writes Swisher, who compares the would-be deal to Google's bid for local reviews site Yelp.

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