According to analysts a merge with AOL could be a viable alternative for Yahoo to avoid being acquired by Microsoft.
That was one of three scenarios Di Bona laid out in a research note on Friday, and his favorite.
If Yahoo and AOL were to merge, Di Bona estimates that it could yield investors $28 a share. But that depends on AOL parent Time Warner kicking in $2 billion for its Yahoo stake and the combined entity generating a minimum of $500 million in synergies.
A better deal would be for Yahoo and AOL to merge, but for AOL to retain its lucrative Google search deal. And the value of such an arrangement? A merger deal that could ultimately yield $31 a share, Di Bona estimates.
A price in that range would bring Yahoo investors back to the level of Microsoft's initial cash-and-stock offer, which has fallen to a value $29.34, as Microsoft's shares have declined since the bid was announced February 1.
As for a third option of AOL and Yahoo both relinquishing their search to Google, Di Bona casts doubt that such as scenario will come to fruition.