Yahoo! Rejects Microsoft, Contemplates Merger With… AOL?

Yahoo! has been receiving a lot of press lately, thanks to the fact that they are looking to be bought up by a great company, or merge with another. Like the weather in my city, the potential deals are changing far too fast.. it’s hard to keep up. Last week, we found out that Microsoft had interest in purchasing the company for a staggering $40+ billion, but as it turns out, Yahoo! wants absolutely nothing of the sort. Or, they at least want to play hard to get, in order to increase their worth.

So, Yahoo! doesn’t want Microsoft – what else could possibly happen? Why, a merger with AOL, of course. If you just muttered a silent “WTF” under your breath, don’t worry, you are not alone. Why Yahoo! would even contemplate a merger with a company whose history is scattered, I’m unsure, but these talks could yet be another way to drive up the companies price.

I think Michael Arrington summed it up rather well, “AOL’s great, and I appreciate the effort they are putting into creating quality, cutting edge web services. But AOL plugs none of Yahoo’s holes – no search marketing platform (Google handles that for them). No algorithmic search technology (ditto). And very few actual searches (they have 5% market share, or less).“

Who knew watching Yahoo! play this game would be so much fun?

In short, while a merger between Yahoo and the content and advertising business of AOL has some synergies and may have made some sense pre-Microsoft bid, it seems impossible that Yahoo shareholders could possibly approve it in light of an existing offer that values Yahoo at a 60 percent premium to where it was trading only 10 days ago.

Source: Mashable