The shortlist comprises mainly large companies and big private equity firms including TPG Capital, and excludes many small companies that proposed some kind of combination, such as privately held Yellow Pages owner YP, the people said this week.

The sources declined to divulge the full list.

Some bidders that did not make the shortlist because their first-round offers were not specific enough are still being kept close to the process by Yahoo’s advisers, the people said. One of those bidders is Liberty Media Chairman John Malone, who has proposed a tax-efficient merger with one of the companies he controls, the people said.

The sources asked not to be identified because details of the sale process were confidential. Yahoo (YHOO), Verizon (VZ), TPG and YP declined to comment. Liberty Media (LMCA) did not respond to a request for comment.

A sale of Yahoo’s Internet assets for cash, followed by a divestment of its 35.5% stake in Yahoo Japan, would leave the company owning just its 15% stake in Chinese e-commerce company Alibaba Group (BABA).

In December, Yahoo scrapped plans to spin off its Alibaba stake, after investors fretted over whether that transaction could have been carried out on a tax-free basis.

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Yahoo has been laying off employees and seeking to cut costs as its core Internet business shrinks.

Earlier this week, Yahoo said that activist hedge fund Starboard Chief Executive Jeffrey Smith and three independent directors associated with him would join its board immediately. A truce with Smith, its most vocal activist investor, helps Yahoo clear the way for the auction of its core businesses, analysts said.

Yahoo’s four new directors were on a slate that Starboard proposed last month to oust Yahoo’s entire board.

Analysts see Verizon, which bought AOL last year for $4.4 billion, as the candidate likely to prevail in the auction.

Verizon is being advised by three investment banks, Guggenheim Partners, LionTree and Allen & Company, as reported by Reuters.