Has Yahoo! found its life partner in AOL?

5 Mar 2008

It looks as though Microsoft’s hostile bid for search engine giant Yahoo! may drive the company into the arms of another, Time Warner, despite an offer worth US$41.2bn – one hell of an engagement ring.

Is the reported Yahoo!/Time Warner deal a rebound bid or a match made in internet heaven?

Yahoo! has reportedly been in talks with Time Warner about its internet division AOL, a joint venture that may create an online synergy worth US$1bn in savings per year.

AOL, estimated to be worth between US$10-12m, according to Silicon Alley Insider, still remains a powerful draw for internet traffic with over 120 million users, a base for Yahoo! to target its display advertising.

The shadow of Microsoft looming over the search engine company has prompted other dealings as Yahoo! is said to be in talks with Rupert Murdoch’s News Corp to buy social networking site MySpace. In exchange, News Corp would get a sizeable stake in Yahoo!.

Despite Yahoo!’s talks with these companies, as well as supposed discussions with Google, industry analysts say the Microsoft/Yahoo! merger will most likely go ahead, although this precious time bought by Yahoo! may make for a more flexible deal with the Redmond-based company.

However, Microsoft seems adamant the deal will happen, previously saying: “Based on conversations with stakeholders of both companies, we are confident that moving forward promptly to consummate a transaction is in the best interests of all parties.”

By Marie Boran