Does AOL want a Yahoo merger?

Curious goings-on with private equity firms, AOL and Yahoo in the states. Those familiar with the matter have told The Wall Street Journal that Silver Lake Partners, Blackstone Group LP and others have expressed interest in partnering with AOL to buy out Yahoo – or trying to take it on themselves.

AOL, maker of ten billion “free internet” CDs sitting in a landfill somewhere, has market capitalisation of just $2.68 billion compared to Yahoo’s $20.56 billion market value. Still, preliminary discussions are apparently taking place though Yahoo has not been involved yet.

After-hours trading yesterday, on the Nasdaq market, saw Yahoo shares grow 13 percent to $17.23. It traded 49.6 million shares in the regular session – compared with an average of 17 million a day so far this month, making it one of the top performing technology stocks.

Apparently, says The Wall Street Journal, a scenario under discussion is a deal where the Chinese Alibaba Group would take back Yahoo’s 40 percent stake in Alibaba. Then other Yahoo assets would be sold off to media and technology outfits – what is left over would then be more affordable for private equity firms.

Another scenario reported on by the WSJ is AOL combining operations with Yahoo, acting essentially as a “reverse merger” following the Alibaba stake being sold off.

CEOs from both Alibaba and AOL have talked of buying out AOL. Alibaba’s stake in Yahoo is estimated at $10 billion – a significant chunk of Yahoo’s market value. People familiar with the matter told The Wall Street Journal that private equity firms are considering joining forces with media companies to buy Yahoo. 

Foul-mouthed Carol Bartz, who famously told TechCrunch founder and current AOL employee Michael Arrington to take a hike in rather more obscene terms, has the pressure on following senior employees f’ing off too. Bartz has thought about cutting costs to boost struggling revenues in an age where display advertising is totally dominated by Google.

AOL and Yahoo have discussed a merger before, back in 2008. Nothing came of it. Microsoft also considered buying out Yahoo for $45 billion but changed its tune. A merger could see the two early internaughts taking on the new-meedja bigwigs like Schmidt’s gang – but who knows how.