Yahoo surges on reports of buyout by AOL
Yahoo (YHOO, Fortune 500) surged 15% on the report by the Wall Street Journal, which cited "people familiar with the matter."
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 likely 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.
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.
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