Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Yahoo surges on report AOL wants to buy it

chart_ws_stock_aolincorporated.top.png By Aaron Smith, staff writer


NEW YORK (CNNMoney.com) -- Yahoo's stock price surged in early trading Thursday on reports that rival Internet portal AOL is considering a takeover of the company, with some help by private equity firms.

Yahoo (YHOO, Fortune 500) stock soared 6% on the report by the Wall Street Journal, which cited "people familiar with the matter." They held some of their gains throughout the day, ending trading up 4.5%, at $15.93.

The report said that Silver Lake Partners and Blackstone Group LP are among the private equity firms that are considering a purchase of Yahoo.

AOL (AOL) would need help with the financing, as its market capitalization of $2.68 billion is about one-ninth the size of Yahoo's market cap of $20.56 billion. Gathering a group to finance the deal would be tricky, but not impossible.

ThinkEquity analyst Aaron Kessler said a potential merger provides a catalyst for driving Yahoo's "inexpensive" shares -- a catalyst that does not otherwise exist. In his note to investors, Kessler also wrote that a merger would "provide clear revenue and operating synergies on both display and search"

But there are also negatives, said the analyst, such as the fact that a merger would overshadow Yahoo's improved bottom line performance that Kessler projects for 2012.

He also referred to the report that Yahoo might sell its 40% stake in Alibaba and said this would be a bad idea, since the Chinese online trading platform is Yahoo's "most valuable long-term asset."

Time Warner (TWX, Fortune 500), which owns CNNMoney.com, spun off AOL late last year. To top of page

Search for Jobs

Index Last Change % Change
Dow 19,732.40 -72.32 -0.37%
Nasdaq 5,540.08 -15.57 -0.28%
S&P 500 2,263.69 -8.20 -0.36%
Treasuries 2.46 0.07 2.93%
Data as of 5:32am ET
Company Price Change % Change
CSX Corp 45.51 8.63 23.40%
Bank of America Corp... 22.53 -0.10 -0.44%
Chesapeake Energy Co... 6.62 -0.36 -5.16%
General Electric Co 31.21 -0.02 -0.06%
Micron Technology In... 21.71 -0.62 -2.76%
Data as of Jan 19
Sponsors

Sections

A 1.1 million square foot mall in Pittsburgh just sold for about as much money as you'd expect to spend on a pair of snow boots. More

Uber will pay $20 million to settle a lawsuit with the Federal Trade Commission for misleading drivers about how much they could earn on the platform. More

If you're smart about when you first claim Social Security, you can increase your benefits and reap the rewards for the rest of your life. More