Yahoo! has restarted talks with AOL about a deal designed to help it avoid a takeover by Microsoft.
AOL is believed to have held discussions with Yahoo!’s advisers in recent days to see if an agreement between the two companies is possible. Yahoo! and AOL have held discussions in the past, but failed to team up because of differences over price.
Microsoft’s hostile $44.6 billion (£23 billion) bid for Yahoo! (see Microsoft Bids $44.6bn For Yahoo!) and the credit crunch have given the talks fresh momentum.
The terms of the current discussion between Yahoo! and AOL are unclear (see Yahoo! Could Restart Merger Talks With AOL), but a potential stumbling block is the role of Google, which owns a small stake in AOL and has advertising agreements with the company.
Strict anti-trust laws could come into play, if Yahoo! combines with AOL or Rupert Murdoch’ News Corporation, which is also said to be involved in tentative talks with Yahoo!
Murdoch is understood to have met Yahoo! chief executive Jerry Yang last week about merging its online division, which includes MySpace, with Yahoo! to create a powerful presence on the internet.
Under the News Corp plan, Murdoch’s empire is understood to have offered to buy a 20% stake in Yahoo! in an agreement that would see Yahoo! swap shares in the company for a host of News Corp’s online assets.
Yahoo! has dismissed Microsoft’s approach as undervaluing its brand, audience, investments in advertising platforms and future growth prospects, free cash flow and earnings potential.
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