Time Warner’s (TWX) AOL Takes Run At Yahoo! (YHOO)

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Joining the contest to see who will own Yahoo! (NASDAQ: YHOO), Time Warner’s (NYE: TWX) AOL has entered the fray competing with News Corp (NYSE: NWS) as a company which is intense talks to see if it can win a deal with the No.2 search company. Microsoft (NASDAQ: MSFT) has already offered $44 billion for Yahoo!

According to The Telegraph "AOL’s determination to present itself as the most attractive of the white knights available to Yahoo! follows the formal rejection last week of Microsoft’s $31-a-share offer for Yahoo!."

With a market cap of $60 billion, Time Warner could not buy Yahoo! outright because the portal company already has an offer for $44 billion from Microsoft. But, like News Corp, it could offer to put AOL into Yahoo! to take a piece of the firm. With AOL currently valued at about $20 billion, this stake might be as big as 33%.

In a consolidation AOL and Yahoo! could cut large numbers of staff and Yahoo!’s search could be the de facto product for all of AOL greatly expanding it reach. Google (NASDAQ: GOOG) has this franchise now, but might give up its arrangement to block Microsoft.

Douglas A. McIntyre