• by Gavin O'Malley  @mp_gavin, October 14, 2010

As rumors regarding the future of Yahoo and AOL abound, analysts seem certain that significant obstacles stand in the way of any potential merger.

"In concept, we agree that there would be synergies between Yahoo and AOL, but we believe the reality of the situation is that it would be easier for Yahoo to acquire AOL outright than for the reverse to happen with PE involvement," Piper Jaffray analyst Gene Munster wrote in a note to investors.

According to a story published in The Wall Street Journal late Wednesday, AOL is eying an acquisition of Yahoo, likely with the help of private equity investors, including Silver Lake Partners and Blackstone Group. Such a deal would probably require Yahoo to sell its 39% stake in Chinese Internet company Alibaba, according to The Journal.

Neither AOL or Yahoo responded to requests for comment on Thursday, while analysts didn't waste any time assessing the merits of a merger.

"Given the significant return potential of Alibaba as well as management's belief that Yahoo is undervalued, we believe it is unlikely that Yahoo would sell out for less than $22-25/share," writes UBS's Brian Pitz.

"There are a couple of big factors that make the potential buyout a low probability event," Stifel, Nicolaus & Co. analyst Jordan Rohan explained in a note to investors. "Those factors are the lack of availability of financing for a full $30 billion takeout ... and the incentive that Yahoo management has to wait for a liquidity event at (Alibaba Group subsidiary and China's largest online retailer) Taobao."

What's more, adds Pitz: "We have many unanswered questions, such as the tax implications of asset sales in Asia. There is also regulatory risk."

Caris & Co. analyst Sandeep Aggarwal wrote: "In our view, Yahoo choosing to become part of private equity is less likely but the probability of Yahoo selling its stake in the private assets of Alibaba sooner than expected is very high."

"The biggest positive for an acquisition would be a clear catalyst for shares," wrote ThinkEquity analyst Aaron Kessler. "On the other hand, an acquisition today could undervalue both Yahoo's turnaround and the Alibaba Group assets."

Meanwhile, in addition to the huge amount of capital required and Yahoo's unwieldy assets, Citigroup analyst Mark Mahaney anticipates "strong opposition (to any potential merger) from current management (including CEO Carol Bartz, and co-founders Jerry Yang and David Filo) and probably key board members."