Yahoo! for restarting merger parleys with AOL

Leading internet firm Yahoo! is seeking to restart the merger talks with Time Warner-owned AOL to defend itself against the $44.6 billion takeover bid by Microsoft, a British media said today.

According to The Times, one option being explored by Yahoo! is to restart the merger talks with AOL to fend off Microsoft from taking over the firm.

"It is also understood that one option being explored is to restart merger talks with AOL, the online business owned by Time Warner. Tie-ups with the groups such as Google or Disney are also being considered," said the newspaper.

Although Yahoo! and AOL previously failed to join forces because of differences over the price, it is hoped that the urgency created by an unwelcome approach from Microsoft and an impending economic downturn will spur the two into new talks.

The world's largest software maker Microsoft had made an unsolicited $44.6 billion takeover bid to Yahoo! in cash and stock earlier this month. Microsoft is pursuing the internet firm to compete with the world's popular search engine Google in the online search advertising market.

Interestingly, Google has a five per cent stake in AOL.

According to the report, it is understood that Yahoo! and its team of advisers from Goldman Sachs and Lehman Brothers, the US investment banks, have spent the past week evaluating possible tie-ups with media and technology firms that would save it from being swallowed by Microsoft.

Further, the newspaper noted that Jerry Yang, the co-founder of Yahoo!, would today tell Wall Street that the firm's board has rejected the software giant's offer due to undervaluation.

"It is believed that the Yahoo! board will not even consider starting talks with Microsoft unless the suitor group offers at least $12 billion or more, representing a share price value of more than $40," it said.