Yahoo could merge with AOL

Posted on Friday, Apr 11 2008 @ 21:41 CEST by Thomas De Maesschalck
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.

About the Author

Thomas De Maesschalck

Thomas has been messing with computer since early childhood and firmly believes the Internet is the best thing since sliced bread. Enjoys playing with new tech, is fascinated by science, and passionate about financial markets. When not behind a computer, he can be found with running shoes on or lifting heavy weights in the weight room.

Loading Comments