Yahoo may be on the verge of closing its biggest acquisition during the 10-month reign of CEO Marissa Mayer as she tries to attract more traffic and advertisers to the company's website and mobile applications.
The company's board of directors will meet this evening to consider approving a $1.1 billion acquisition of online content-sharing site Tumblr.
If Yahoo Inc.'s board signs off, the deal could be announced tomorrow.
In an invitation sent Friday, Yahoo promised to unveil "something special" tomorrow evening in New York.
The event is being held in a Times Squares lounge located about 3kms from Tumblr's headquarters.
Yahoo has only said that Ms Mayer will be on hand to unveil something related to a product.
A company spokeswoman did not immediately respond to a request for comment about the potential Tumblr acquisition.
Buying Tumblr would fulfill Ms Mayer's goal of reaching a wider audience on smartphones and tablet computers.
Tumblr serves up a constantly changing collage of stories, photos and other digital content served up by users who are increasingly connecting to the service through its mobile applications.
If it is completed, the Tumblr deal would be Ms Mayer's biggest coup - and, at the same time, the biggest risk - since she ended her 13-year career as a key executive at Google Inc. to try to snap Yahoo out of a prolonged malaise that had demoralized employees and investors alike.
Since her arrival, she has been focused on redesigning several Yahoo services and bringing in more mobile engineering talent, primarily by buying a series of small startups.
None of those previous acquisitions have required Yahoo to dip too deeply into its bank account.
Late last year, Yahoo paid a total of $7 million for two start-ups called OnTheAir and Stamped.
In the first three months of this year, Yahoo snapped up three more start-ups for a total of $10 million, according to the company's regulatory filings.
Tumblr, founded in 2007 by its CEO David Karp, presumably would become a pivotal part of Mayer's effort to sell more advertising.
Ms Mayer has been winning back investors, even though the company's revenue is still lagging the overall growth of the booming Internet and mobile advertising market.
Yahoo's stock price has risen 69% under Ms Mayer's leadership.