AOL 'enters Yahoo! race'

18th February 2008

Internet giant AOL has reportedly opened talks with Yahoo! about a deal that could prevent the search engine being acquired by Microsoft.

Yahoo! recently turned down a $42 billion (£21.5 billion) bid from Microsoft, but speculation is growing that the world's biggest software company could be planning to mount a hostile takeover bid.

It is believed that Microsoft wants Yahoo! in order to boost its presence in the internet market and to give it a stronger base from which to challenge Google for revenue from search advertising.

However, reports suggest that Time Warner-owned AOL hopes to head off the potential takeover by reaching its own agreement with Yahoo!

Talks have apparently already taken place between representatives from the two firms but it is unclear whether a full takeover has been discussed.

News Corporation, the owner of social networking website MySpace, has also expressed an interest in purchasing a stake in Yahoo!, although Rupert Murdoch's company has made it clear a takeover bid is not on the cards.