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Yahoo! is moving its European headquarters from London to Switzerland and is telling senior staff to pack their bags or leave the company.

Yahoo! is moving to Rolle, near Geneva, Switzerland, the Financial Times reports.

The main reason is to reduce its corporate tax bill. Yahoo!'s operational and product managers got an email yesterday telling them of the move. The company has not yet decided how many staff will move, but 50 senior staff will go by the end of the year. Yahoo! has some 700 staff in the UK.

The 18 month process, dubbed "Operation Yodel", may of course get overtaken by events if the Microsoft takeover is successful.

A spokeswoman for Yahoo! told the Register: "We have begun a programme to relocate to Switzerland which will take 18 months. We are not confirming numbers yet but are committed to keeping a presence in London too."

Meanwhile, in the US there were the first signs of a thaw in relations with Microsoft as the two companies reportedly had preliminary discussions about the merger. Yahoo! was previously refusing to discuss what it considered an unwelcome takeover bid. The talks were mostly Microsoft staff laying out future plans for the combined company, according to the Wall Street Journal.

Talks are made more significant because Yahoo! reports its quarterly earnings on 22 April and any failure to hit targets is likely to hit its share price and, therefore, make the takeover bid more tempting for shareholders. Microsoft offered $44.6bn for the company or $31 per share.

Other would-be Yahoo! suitors like Time Warner and News Corporation have made clear in recent days their lack of interest in the company. Rupert Murdoch said he was not interested in getting into a bidding war with Microsoft and is anyway busy integrating Dow Jones. TimeWarner yesterday bought Bebo. ®

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