Though struggling, Yahoo and AOL are still two of the biggest Internet companies in the world. That's why a Wall Street Journal report hinting at the possibility of an AOL-Yahoo merger sparked a flurry of interest on Wall Street. Do the two companies pair well? How likely is a merger?
- A Merger Could Really Help Them Beat Google, writes Jessica Vascellaro and Anupreeta Das at The Wall Street Journal: "A combined Yahoo-AOL would have greater scale to compete in online advertising against industry juggernaut Google Inc. While both companies draw huge amounts of users, their advertising businesses have struggled as they've faced competition from a range of websites."
- This Merger Could Be a Godsend, adds Henry Blodget at Business Insider. He gives a number of reasons why:
- This Merger's Not About to Happen, writes Andrew Ross Sorkin at The New York Times:
Hold on a moment. A deal is not happening anytime soon. The trial balloon in the media is coming from a handful of bankers and investors who have tried to gin up interest in a deal for months. And at least a few of the named “suitors” in The Journal’s story, like the Blackstone Group, have already passed on the idea. More importantly, Yahoo first heard about the rumors from the media and its own bankers at Goldman Sachs, according to people close to the company. ...
Making a deal work would require fancy footwork and risk. AOL’s market value is about $2 billion, while Yahoo’s is now about $20 billion — before a premium. The back-of-the-envelope math requires that Yahoo sell its 39 percent stake in Alibaba, one of China’s biggest Internet companies and considered one of the company’s biggest and most desirable assets, which could be worth $12 billion... But Yahoo believes that Alibaba will fetch more in a public spinoff down the road than in a sale now, so why sell now?