Yahoo to restart AOL merger talks

Nearly two days after planning to reject Microsoft’s $44 billion hostile takeover bid, Yahoo Inc. is now making efforts to restart merger talks with America Online (AOL), The Times newspaper reported.

AOL is the American online service provider, bulletin board system, and media company operated by Time Warner. Formerly known as America Online, Inc., AOL is the world's largest online information service with access to the Internet, e-mail, chat rooms and a variety of databases and services.

According to the report, Yahoo is seeking to restart merger talks with Time Warner Inc unit AOL as a possible way to defend itself against the potential hostile take over from Redmond, Washington-based Microsoft.

Yahoo and AOL previously in 2005 tried to join forces but failed because of differences over price.

Analysts guess the deal would once again break down as it would seem almost impossible for the second largest search engine Yahoo to convince its shareholders that an AOL merger is a better option than Microsoft’s $31 per share cash and stock deal.

In spite of several synergies with AOL such as email, instant messaging, and display advertising, offering the companies a sizable presence in e-mail and internet messaging, analysts doubt the merger talks between Yahoo and AOL would be fruitful.

As per the report Yahoo was also considering merger talks with groups such as Google and Disney.

Internet media company Yahoo that spent years trying and failing to catch up with Google in Web search and the lucrative market for ads linked to search results, over the weekend planned to reject Microsoft's $44.6 billion takeover offer, a source familiar with the issue quoted by the media reports on Saturday as saying.

Yahoo's board, which spent last week reviewing Microsoft's offer, planned to reject the largest software company’s $31-per-share unsolicited offer, saying the offer "massively undervalues" Yahoo, and doesn't properly account for the risk that a deal could be blocked by regulators.

Microsoft, which dominates the global computer market with its ubiquitous Windows software, announced February 1 its bid to buy search engine Yahoo for $44.6 billion that represented a 62% premium over Yahoo stock price one day earlier.

Billing the Redmond giant’s proposed offer too low, Yahoo's board is expected to announce that it has rejected the cash-and-shares buyout offer.