AOL may soon make a Yahoo buyout offer

AOL

AOL is in preliminary talks to make an offer for Yahoo Inc. Image: Flickr / RobotSkirts / CC-BY-SA

Yahoo Inc., is a company with a huge number of potential suitors. AOL is considering making a purchase offer for Yahoo Inc. AOL is just one of the many entities considering a purchase offer for Yahoo — private-equity firms are also in discussions.

Potential merger with Yahoo and AOL

AOL is an Internet and media company that began life as America Online. Yahoo Inc., is also an Internet and media company. Yahoo makes the majority of its income from search and advertising business. AOL and Yahoo have discussed merging once before, in 2008. The companies would compete mostly in search and advertising, where the two separate companies are not doing well against search behemoth Google. While both companies have a respectable number of visitors, their visitor interaction and time on site has been going down.

How AOL would buy Yahoo

There are multiple options for AOL to possibly buy Yahoo. Yahoo has a long-standing partnership with Goldman Sachs. In 2008, Microsoft tried to buyout Yahoo, but eventually withdrew their bid. AOL is in discussions with several private equity firms in order to fund the purchase of Yahoo. Silver Lake Partners and the storied Blackstone group are both front-runners for possibly funding the AOL-Yahoo partnership. These partners would maintain at least partial control of the partnership, though potential details have yet to be disclosed.

What AOL Yahoo would look like

AOL and Yahoo are both companies that are familiar with mergers and spin-offs. AOL was spun off of Time Warner Cable in 2009, after they originally merged a few years earlier. Just this year, Yahoo has created a partnership with Microsoft’s Bing search engine. As talks are in their early stages, there are no details on how the merged company would operate. However, it is a possibility that search will, for the time being, come down to a Google vs. AOL / Yahoo / Bing conglomerate.

Sources:

Wall Street Journal

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