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. 
| Index | Last | Change | % Change |
|---|---|---|---|
| Dow | 12,938.67 | -27.02 | -0.21% |
| Nasdaq | 2,933.17 | -15.40 | -0.52% |
| S&P 500 | 1,357.66 | -4.55 | -0.33% |
| Treasuries | 2.00 | -0.04 | -1.96% |
| Company | Price | Change | % Change |
|---|---|---|---|
| Bank of America Corp... | 7.95 | -0.16 | -1.97% |
| Microsoft Corp | 31.27 | -0.17 | -0.54% |
| Ford Motor Co | 12.28 | -0.25 | -2.00% |
| General Electric Co | 19.39 | 0.17 | 0.88% |
| Citigroup Inc | 32.36 | -1.00 | -3.00% |
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