Yahoo In Close Talks With AOL, Person Says
San Francisco – With the twisting of events and hectic negotiations — Yahoo! Inc., trying to fend off Microsoft Corp.’s $44.6 billion acquisition offer, is on the brink of striking an agreement with America Online to combine the two struggling companies’ Internet operations, a source familiar with the talks said on Wednesday.
The Journal quoted unidentified people “familiar with the matter” as saying California-based Yahoo and Time Warner-owned AOL are negotiating a tie-up that could benefit them both.
The source established a Wall Street Journal story saying that – “As part of the AOL deal, Time Warner would make cash investment in exchange for a 20 percent stake in the joint unit. The deal would leave out AOL’s vanishing dial-up Internet access business and value AOL at about $10 billion.”
An association with AOL would then help Yahoo use the Time Warner cash to thwart a hostile takeover bid by US software giant Microsoft, which is trying to buy the pioneering California Internet firm in a stock and cash deal originally valued at 44.6 billion dollars. Yahoo would pay between $30 and $40 per share for an unspecified amount of stock, the Journal said.
All of these prospective deals would create incorporation nightmares, but a three-way tie between Microsoft, MySpace, and Yahoo would build an entity with so much traffic and advertising inventory that it might not matter.
The chances of such a difficult deal going through, though, are small. The most probable outcome is still Microsoft buying Yahoo, and this is all just fodder for the negotiations.