It has been reported that Time Warner and Yahoo! stepped up negotiations as Yahoo! searches for realistic alternatives to a hostile takeover by Microsoft. The two companies have held discussions in the past, but had previously failed to team up due to differences over price. Talks were reinitiated when Yahoo! re-approached Time Warner recently.
The talks between the companies suggest the possibility of folding Time Warner's AOL internet unit into Yahoo! in exchange for a large minority stake in the combined company for Time, say sources speaking to The Wall Street Journal. The sources suggest that the companies could save $1 billion a year from such a proposal and that the proposed deal is being supported by Google, who have a 5% stake in AOL.
Yahoo! rejected Microsoft's £23bn offer, made on February 1, announcing that it undervalued their company, but the decision attracted much criticism and speculation - not least from a number of Yahoo!'s shareholders.
With Microsoft expected to propose candidates for Yahoo!'s board by March 14, Yahoo! is working to a tight deadline - although it may try to push the deadline back. It has been suggested that Microsoft will attempt a boardroom coup at Yahoo!, meaning the search engine is well advised to engage in talks concerning the potential takeover bid, something which may take place over the weekend.
The New York Times also reports that Yahoo! may be planning to postpone its annual meeting, a move that could either be seen as a way for the search pioneer to cut itself a little more space for manoeuvre or as a chance for Microsoft and Yahoo! to strike a friendly deal. However, it's possible that it won't be welcomed by Yahoo!'s investors and could even result in lawsuits from not only Microsoft, but also the shareholders themselves.
In addition to their talks with Time Warner, Yahoo! are also in discussion with News Corp, reportedly considering a potential deal which would see News Corp allowing Yahoo! to purchase MySpace in an exchange for a stake in the company.
However, many sources still consider it likely that Microsoft's advances will be ultimately successful as rivals will be unable to offer as much as Microsoft. Whether Yahoo! shareholders would be satisfied with a deal between Time Warner and Yahoo! remains to be seen but it's certainly something the search engine will have to take into consideration.
