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Is Yahoo eyeing Demand Media?

Despite Yahoo's current state of affairs, rumors are swirling that it has approached the social networks company with an offer. Yahoo sources shrug off the reports.

Despite a hectic past two months fighting off a proxy battle with investor Carl Icahn, Yahoo is rumored to be sending out buyout feelers for social-networks company Demand Media.

Yahoo's Hilary Schneider, who was recently promoted to oversee the company's U.S. go-to market operations, traveled to Demand Media's Santa Monica, Calif., offices a couple weeks ago to gauge Demand's interest in a $1.5 billion to $2 billion buyout, TechCrunch reports, citing unnamed sources.

But Demand Media didn't bite, TechCrunch notes, adding that company founder Richard Rosenblatt is said to be seeking a price in the $3 billion range.

A post in All Things Digital casts a different perspective on that meeting.

In an interview with All Things Digital, the Demand Media founder said: "There is a lot of potential here, and I want to build a big company for the long-term."

All Things Digital also cites Yahoo sources as saying there has been "no offer floated" to acquire Demand Media.

But both reports note that a hook-up between the companies wouldn't be a bad idea.

Says TechCrunch:

It just so happens that what Demand Media is good at--generating lots of advertising impressions and creating niche social networks for media sites, may be a perfect fit for at least some of what ails Yahoo.

But should Yahoo want to make a play for the company and force a deal, Demand Media doesn't have the same pressures as Yahoo, which is in its own fix with Icahn. Demand Media isn't publicly traded, at least yet...