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 19,756.85 142.04 0.72%
Nasdaq 5,444.50 27.14 0.50%
S&P 500 2,259.53 13.34 0.59%
Treasuries 2.46 0.08 3.23%
Data as of 2:07am ET
Company Price Change % Change
Bank of America Corp... 23.09 0.14 0.61%
Ford Motor Co 13.17 0.14 1.07%
Chesapeake Energy Co... 7.72 0.12 1.58%
Twenty-First Century... 28.21 -0.43 -1.50%
Apple Inc 113.95 1.83 1.63%
Data as of Dec 9
Sponsors

Sections

Even Carl Icahn, one of President-elect Donald Trump's biggest cheerleaders on Wall Street, thinks the post-election exuberance in the stock market has gotten a bit out of hand. More

Republican leaders keep saying Obamacare is hurting the economy and killing jobs, but there's scant evidence for it. In fact, a number of studies show that the economy has been growing. More

Facebook admits it messed up more ad metrics than previously thought, potentially eroding its trust and relationship with marketers and publishers. More

The Los Angeles city attorney is suing four major retailers over claims that they deliberately inflated the original price on some items that misled customers into thinking they were getting a better deal. More