AOL talks to investment firms in rumoured bid to buy Yahoo

AOL and several investment firms are rumoured to be in talks to buy Yahoo.

AOL and several investment firms are rumoured to be in talks to buy Yahoo.

According to the Wall Street Journal (WSJ)'s unnamed sources, investment firms Silver Lake Partners and Blackstone Group have "expressed interest" in buying Yahoo with AOL. Yahoo personnel are not involved in the early stages of talks, said WSJ.

"A combined Yahoo-AOL would have greater scale to compete in online advertising against industry juggernaut Google. While both companies draw huge amounts of users, their advertising businesses have struggled as they have faced competition from a range of websites," said the WSJ report.

Issues reportedly being discussed include China's Alibaba Group to buy back Yahoo's 40% stake in Alibaba. WSJ believes two or three other firms could be interested in a formal buyout proposal.

Yahoo shares fell more than 6% earlier this year after second-quarter sales came in at $1.13bn (£7.39bn), failing to reach analyst expectations of $1.16bn.

Carol Bartz, Yahoo's chief executive, said demand for search advertising had slowed during the quarter, but was beginning to return to normal.

Microsoft attempted to buy Yahoo in 2008 but struck a search advertising deal with the firm instead last year.

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