AOL, Yahoo Merger Talk Intensifies - InformationWeek
Mobile // Mobile Applications
11:10 AM

AOL, Yahoo Merger Talk Intensifies

While the companies aren't commenting on the record, AOL has hired advisors to examine various ways a deal might work, reports the Wall Street Journal.

Slideshow: Yahoo's Hadoop Implementation
(click for larger image and for full slideshow)

Hedge fund dealmakers are continuing to stalk two battered Internet heavyweights -- Yahoo and AOL -- and chatter focusing on some sort of combined deal involving the companies has progressed to the point where AOL has hired advisors to examine different scenarios, according to a Wall Street Journal report Monday.

With a market capitalization of $21.85 billion, Yahoo is more than eight times larger than AOL's $2.66 billion capitalization, but one scenario said to be under examination would have AOL acquire Yahoo in a so-called "minnow swallowing a whale" equity maneuver. Neither company has commented on the rumors.

Both firms, however, have been seeking -- so far unsuccessfully -- to regain their lost luster. After a disastrous merger with Time Warner and billions of dollars up in smoke, AOL was spun off as an independent company last December. Its new chief executive, ex-Googler executive Tim Armstrong, has been working to whip the company into shape since taking over the helm.

Ever since Yahoo turned down Microsoft's $31-a-share acquisition offer more than two years ago, Yahoo's stock has been stuck in a trading range of about half of Microsoft's offer. Yahoo's new president and chief executive, Carol Bartz, has sought to juggle Yahoo' assets -- still formidable -- but hasn't been able to engineer a higher Yahoo stock price.

The Wall Street Journal noted that any deal involving Yahoo would likely involve Yahoo's stakes in Yahoo Japan and in China's Alibaba Group. The biggest challenge facing private equity groups trying to hammer out any deal would be to dig through the labyrinth of connecting companies. Cisco, too, has an important stake in Alibaba, Microsoft provides its Bing search engine on Yahoo sites, and AOL uses some Google search technology on its sites, for instance.

To date, all the activity has been behind the scenes and none of the companies involved in any potential deals have commented on the reports.

For Further Reading

AOL May Acquire Yahoo, Report Says

AOL Completes Spin-Off From Time Warner

China's Alibaba IPO Raises $1.5 Billion But Cisco And Yahoo Strike It Rich

Microsoft Proposes To Buy Yahoo For $31 Share, In $44.6-Billion Deal

Comment  | 
Print  | 
More Insights
Newest First  |  Oldest First  |  Threaded View
How Enterprises Are Attacking the IT Security Enterprise
How Enterprises Are Attacking the IT Security Enterprise
To learn more about what organizations are doing to tackle attacks and threats we surveyed a group of 300 IT and infosec professionals to find out what their biggest IT security challenges are and what they're doing to defend against today's threats. Download the report to see what they're saying.
Register for InformationWeek Newsletters
White Papers
Current Issue
2017 State of IT Report
In today's technology-driven world, "innovation" has become a basic expectation. IT leaders are tasked with making technical magic, improving customer experience, and boosting the bottom line -- yet often without any increase to the IT budget. How are organizations striking the balance between new initiatives and cost control? Download our report to learn about the biggest challenges and how savvy IT executives are overcoming them.
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Flash Poll