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AOL, News Corp, private equity firms all have hots for Yahoo!

Report cites big interest in struggling web portal

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AOL, News Corp and a number of private equity outfits are reportedly circling Yahoo! in possible bids to buy the web portal.

The Wall Street Journal cites “people familiar with the matter” who claimed that Silver Lake Partners and Blackstone Group LP are mulling a plan to help AOL purchase the Carol-Bartz-run firm.

They are also considering taking Yahoo! private on their own and the WSJ said two or three other companies could be interested in taking part in such a takeover proposal.

The talks are at an early stage and haven’t yet involved any direct discussion with Yahoo!, warned the unnamed sources.

One scenario being considered could involve China’s largest e-commerce website Alibaba Group buying back Yahoo!’s 40 per cent stake in the company, paving the way for AOL to merge with Yahoo!

Separately Alibaba and Microsoft announced yesterday that they had inked a search deal together. Both firms are publicly testing a beta of the new service, dubbed Etao, in China. However, MS declined to comment further on the agreement, reported Associated Press.

Microsoft’s Bing technology recently began powering Yahoo!’s search estate, so it’s hardly surprising to see the software giant strike a deal with Alibaba.

According to the WSJ, analysts have valued Yahoo!’s stake in Alibaba at around the $10bn mark.

Microsoft, of course, backed out of an approach to take over Yahoo! two years ago. It eventually settled on a search deal with the company.

Elsewhere, Reuters reported that private equity firms have been speaking with MySpace owner News Corp in recent weeks about a possible Yahoo! buyout.

Shares in the web portal leapt 13 per cent to $17.23 in after-hours trading on Wall Street yesterday, following the speculation.

An AOL, Yahoo! merger could help both companies get a small leg-up online. Both firms have not only been struggling against Google's dominance, but also with their efforts to remain relevant among surfers who are increasingly turning to the likes of Facebook and Twitter to fulfill their interweb junkie needs.

Whatever happens, AOL can be assured that it retains Alec Baldwin as a faithful user of its service, even if he does think that the company's "homepage content is written by the dumbest bastards in the world." ®

The smart choice: opportunity from uncertainty

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