Yahoo! and AOL were both big time players in the ‘90s and early ‘00s, but since then, both have struggles to maintain relevance under pressure from Google, Microsoft and Web 2.0 companies like Facebook and Twitter.
Rumours have been going around that the two former giants may be merging in a bid to regain that lost relevance. The rumour mill started turning ever since The Wall Street Journal released this report on Wednesday:
Silver Lake Partners and Blackstone Group LP are among the firms that have expressed interest in teaming up with AOL to buy Yahoo or trying to take it private on their own, these people said. They added that at least two or three other firms could be interested in participating if a formal buyout proposal is drawn up.
The people familiar with the matter cautioned that these discussions—involving private-equity firms, AOL executives and financial advisers—are preliminary and don't yet involve Yahoo. The conversations may not lead to an approach given the complexities in structuring a proposal, the people said.
Spokeswomen for Yahoo and AOL declined to comment.
Rumours, shmumours — investors seem to think this is going to happen, with Yahoo! stock rising just shy of five percent in value at the news of this potential merger.
The thinking is that once combined, they would achieve greater profitability by eliminating redundancies within the companies. Both are among the top content aggregators on the web, so it would make sense if they decided to do the same with less overhead.
Not so fast say some analysts; differences in the two companies’ current operations, including search providers and management may prove a stumbling block, and of course, there’s the little matter of finding enough partners to buy out Yahoo!’s $20 billion-plus market value. Things seem extremely preliminary at present, but stay tuned — these developments are nothing if not interesting.
By the way, readers, do any of you still use Yahoo! or AOL? I use Yahoo! for fantasy sports, but aside from that, both of these companies seem to have little to offer. Agree or disagree?