Time Warner's (TWX) AOL said to enter talks with Yahoo! (YHOO)

Posted Feb 17th 2008 9:18AM by Douglas McIntyre
Filed under: Deals, Google (GOOG), Yahoo! (YHOO), Time Warner (TWX), News Corp'B' (NWS)

Joining the contest to see who will own the No. 2 search engine, Time Warner's (NYE: TWX) AOL is reportedly in talks with Yahoo! (NASDAQ: YHOO). News Corp. (NYSE: NWS) is already in intense talks to see if it can arrange a deal that will block Microsoft's (NASDAQ: MSFT) bid for Yahoo!

According to The Telegraph, "AOL's determination to present itself as the most attractive of the white knights available to Yahoo! follows the formal rejection last week of Microsoft's $31-a-share offer for Yahoo!"

With a market cap of $60 billion, Time Warner couldn't buy Yahoo! outright because the portal company already has an offer for $44 billion from Microsoft. But, like News Corp., it could offer to put AOL into Yahoo! in exchange for a piece of the firm. With AOL currently valued at about $20 billion, this stake might be as big as 33%.

In a consolidation, AOL and Yahoo! could cut large numbers of staff and Yahoo!'s search could be the de facto product for all of AOL, greatly expanding its reach. Google (NASDAQ: GOOG) has this franchise now, but might give up its arrangement to stop Microsoft and Yahoo! from joining forces.

Douglas A. McIntyre is an editor at 247wallst.com.

Tags: AOL, inthenews, Telegraph, TWX, Yahoo, YHOO

Print this

Reader Comments (Page 1 of 1)

2-17-2008 @ 9:42AM

Sheldon L said...

AOL also generates 8% to 10% of Googles business so add that to YHOO and subtract from GOOG and the playing field becomes a little more level. I like This combination much better.

2-17-2008 @ 9:51AM

BizIntel said...

If AOL / Yahoo join up, with Yahoo serving as the de facto search platform, this will inject a healthy dose of competition into the online ad market. Google already owns the search / ad space, and Microsoft well, just about owns every space out there.

Having another player to reckon with will force Microsoft and Google to focus on innovation and will ultimately be good for customers in my opinion.

Cheers,

BizIntel
http://www.evaluatingstocks.com