AOL and Yahoo to merge

AOL is exploring a merger with Yahoo, according to Reuters, citing unnamed sources.

AOL is exploring a merger with Yahoo, according to Reuters, citing unnamed sources.

The plans are still in the exploratory stage and Yahoo has not been contacted, the news agency said, but AOL has continued to explore a break-up option since the December 2009 spin-off by Time Warner.

This strategy depends on the buyers for the parts, including Yahoo and EarthLink, whose directions have changed since Time Warner first considered these plans, the sources said.

Analysts said combining Yahoo and AOL's web properties makes strategic sense because Yahoo's home page attracts audience to its sports, finance, general news and e-mail, while AOL, has strengths in maps and entertainment news.

Yahoo, which is expected to generate $1.64bn this year, could support AOL's display ad business, giving AOL the confidence to shed the dial-up division, a big financial engine at the company.

According to sources from the Wall Street Journal, investment firms Silver Lake Partners and Blackstone Group have "expressed interest" in buying Yahoo with AOL. Yahoo personnel were not involved in the early stages of talks, said the newspaper.

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