China's largest e-commerce provider Alibaba is reportedly close to an agreement to buy back a 20 percent stake from Yahoo for about $7 billion.

Reducing the Alibaba stake lessens Yahoo?s toehold the world's largest Internet market (China).

Yahoo currently owns a 40 percent stake in Alibaba so the current proposal under discussion would cut that holding in half.

Both Yahoo and Alibaba declined to comment on Bloomberg's report.