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The 29-year-old World Cup-winner signed a lucrative three-year deal with Toulon in late 2018 but he is yet to play a game for the French club due to an ongoing shoulder injury.
With the remainder of the French Top 14 set to be abandoned due to the coronavirus pandemic, One News reports Milner-Skudder will join the Highlanders for the Super Rugby Aotearoa competition scheduled to start on June 13.
The Highlanders are scheduled to open that competition in Dunedin against the Chiefs.
Milner-Skudder burst on to the scene with Manawatu and the Hurricanes and starred for the All Blacks at the 2015 World Cup. Frequent injury troubles hampered his progress since, which led to him committing his future abroad.
As the door opens for a local comeback, rather than rejoining the Hurricanes, whose outside back stocks are full, it seems Milner-Skudder will instead make his debut for the southern franchise in the 10-week derby competition.
Milner-Skudder's return would follow Sam Whitelock's to the Crusaders after the veteran All Blacks lock returned home early from Japan after the coronavirus spread halted the Top League season there.