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."
Venezuela's President Nicolas Maduro announced a 40% wage hike Thursday one day after thousands of protesters called for him to step down. More
Twitter's failure with Vine mirrors the broader struggles with Twitter itself. More
In 1998, Ntsiki Biyela won a scholarship to study wine making. Now she's about to launch her own brand. More
You can't avoid risk altogether. But you should consider how you can balance different risks. More