IAC's Diller Wants To Buy AOL

Last week, Silicon Alley Insider's Henry Blodget delved into why Yahoo! Inc. (YHOO) should acquire AOL LLC. Though the strategic reasons for a deal made sense, it still seemed unlikely to us, mostly because we couldn't see how Yahoo! could justify a potential purchase price of $20 billion to an already dissatisfied shareholder base.

Now comes word that if Time Warner Inc. (TWX) ever does decide to disconnect from the online property it merged with back in 2000, Barry Diller's IAC/InterActiveCorp (IACI) would be at or near the front of the line of prospective buyers. Diller tells Advertising Age that despite making a number of overtures regarding AOL over the years, he couldn't get Time Warner to take his call.

IAC's market cap is just north of $8 billion, so swallowing AOL for perhaps $20 billion would amount to a very big bite. While Diller is the kind of person who could pull this off, we'd expect someone with deeper pockets to grab the property if Time Warner decides to sell. But with a $340 million acquisition of online advertising firm Quigo Inc. last week and a much smaller deal announced today for question-and-answer search firm Yedda Inc., Time Warner appears to be more in a buying than selling mode and will probably give AOL some time to see if the advertising platform it has pieced together can produce.

See Nov. 7 post in Tech Confidential
See Nov. 9 post in Silicon Alley Insider
See Nov. 12 story from Ad Age
See AOL press release on Yedda acquisition