Rumor: Yahoo! Merging With AOL?
This seems like a very strange idea. But taken in conjunction with the Google ad partnership, just may be plausible, if only to stave off Microsoft.
The Wall Street Journal is floating the possibility that Yahoo! has worked out a merger with AOL as an alternative to be bought by Microsoft.
Under the terms being discussed, Time Warner would fold its AOL unit into Yahoo and make a cash investment in return for about 20% of the combined entity, the people said. The deal, which wouldn’t include AOL’s dial-up access business, would value AOL at about $10 billion. As part of the deal, Yahoo would use the Time Warner cash and additional funds to buy back several billion dollars worth of its own stock at a price somewhere in the middle of the range between $30 and $40 a share, the people said. Any deal would be taken to Yahoo shareholders for approval, the people said.
This might make the combined entity too large for Microsoft to want to swallow – at least today.
I say “today” because at worst, the merger would be two sinking ships tying themselves together, heading into the quagmire that is recession. AOL was nothing but an albatross on Time / Warner’s neck, instead of how it was supposed to be – remember AOL bought Time / Warner. That merger was the most ridiculous, bubbly deal made at the end of the Web 1.0 boom, and signified its collapse. Yahoo! merging with AOL may merely be a move of desperation.
If this comes to pass, I think it’s a safe bet that the combined dirigible would destroy itself with layoffs, fleeing employees, and lumbering management. Haven’t we said all along that the management part of the problem at Yahoo!? What does AOL provide that solves that? Meanwhile, Microsoft (or Google) could just kick back and wait for a year or two, and pick up the combined entity for less.