Yahoo and AOL in Talks for Possible Union

Mar. 05, 2008 4:00 PM ETAABA, GOOG, MSFT, TWX4 Comments
Eric Savitz profile picture
Eric Savitz

Yahoo (YHOO) is in talks with Time Warner’s (TWX) AOL unit about some kind of combination of the two companies, in the company’s latest attempt to find an alternative to accepting Microsoft’s (MSFT) unsolicited $31-a-share takeover bid, the New York Times reports. The story says Google (GOOG), which has a 5% stake in AOL, is supportive of a combination. (And why wouldn’t they be, if it actually stopped Microsoft from succeeding in its offer for Yahoo?)

The Times also says the company is considering postponing its annual meeting as a way of delaying a possible proxy fight by Microsoft, which has been widely reported to be putting together an alternative director slate.

Just how investors would react to a combination between Yahoo and AOL remains to be seen; but I can’t imagine that the Street would find it more appealing than MSFT’s offer. The idea reminds me a bit of the concept of tying two bricks together and then throwing them in the water to see to see if they float.

So far, Yahoo investors seem uninspired by the idea; YHOO Wednesday morning is down 5 cents at $28.01.

This article was written by

Eric Savitz profile picture
Tech Trader Daily is a blog on technology investing written from Palo Alto, California by long-time Barron's West Coast Editor Eric J. Savitz. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Eric joined Barron's as a feature writer in New York in 1988, after four years at the Dow Jones news wires. In 1995, he moved to California as the magazine's first reporter in Silicon Valley, creating the Plugged In column. Eric left Barron's in 1998 to become executive editor of The Industry Standard. He rejoined Barron's in Palo Alto in late 2001. Eric also writes the monthly Tech File column for Smart Money magazine. Visit Tech Trader Daily ( and Barron's Online (

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