Yahoo! in talks with AOL

11th April 2008

Yahoo! is attempting to steer away from a joint-takeover by Microsoft and Rupert Murdoch's News Corporation by merging with AOL, it has emerged.

According to reports, Time Warner - which purchased AOL eight years ago on the cusp of the dotcom boom - may up its stake by 20 per cent, using the cash paid to purchase Yahoo!'s shares at a more expensive price than the $29.34 (£14.87) per share offered by Microsoft.

"We believe Yahoo! is more 'in play' than its stock price and its discount to the Microsoft offer imply. It has more strategic options than the market has believed," Citigroup's Mark Mahaney told the Independent.

However, a joint Microsoft-News Corporation offer could be difficult for Yahoo! to turn down, notes the publication, adding that such a deal could create a network to rival Google's dominance of the advertising world.

Meanwhile, consumer groups are concerned that choice and competition are to be minimised whatever the outcome, reports the Los Angeles Times.