AOL planning break up and merger with Yahoo! – rumour

6 Dec 2010

AOL is looking to exploring a breakup of the company, which may lead to it merging with Yahoo!, according to reports.

Reuters has reported that AOL is still exploring the idea and has not contacted Yahoo! as of yet.

It’s dependent on the buyers for the sectors broken off as they may have different plans for their own companies that don’t involve merging with AOL.

The plan is said to be quite complex. In 2008 and 2009, Time Warner had considered breaking apart its company, spinning its dial-up internet service into EarthLink or United Online and merging its display advertising business with Yahoo!

However, this was wrought with complications, as a breakup would have face heavy taxes and as a result, Time Warner spun off AOL to shareholders.

AOL is still exploring the breakup, but the potential buyers, such as Yahoo! and Earthlink, may have other ideas.

While EarthLink once did want AOL’s dial-up business, since then it agreed to buy DeltaCom Inc and as a result, may not have the money to make the purchase.

However, a merger between AOL and Yahoo! could make sense, as Yahoo! could support AOL’s display advertising business, letting AOL sell off its dial-up division.