• London Times, Monday, February 11, 2008 11:45 AM

The London Times reports this morning that Yahoo has restarted merger talks with Time Warner's AOL in what can only be conceived as a desperate attempt to get Microsoft to up its $45 billion bid for the flagging Internet giant. How badly does Yahoo want to avoid a hostile takeover? According to the Times, the company spent the greater part of the past week searching frantically for alternatives with its team of advisors from Goldman Sachs and Lehman Brothers. In addition to AOL, Yahoo is also exploring possible partnerships with the likes of Google and the Walt Disney Company.

Yahoo and AOL have explored a merger before, but the two companies had failed to agree on a price. Now that Microsoft is breathing down the Yahoo board's neck, the Sunnyvale, Calif. Web giant might be forced to accept a less than optimal deal. Perhaps an AOL deal would also involve a search partnership with Google, as the Microsoft rival already provides search advertising services for AOL, in addition to holding a five percent stake in the Time Warner company. Yahoo has roundly rejected Microsoft's $45 billion bid, saying it would not consider an offer that values the company at less than $40 per share. Microsoft's initial offer was for $31 per share. Meanwhile, the struggling Web giant continues to fumble around for some leverage. What do the critics think of an AOL deal? Says blogger Kara Swisher: "Having written two books about the even-more-troubled-than-Yahoo Internet outfit, here is my official response: Yuk."

Read the whole story at London Times »