Microsoft, Yahoo! circling AOL for acquisition

Stephen Withers
Thursday, 17 July 2008 09:03

IT Industry - Strategy

The entry of AOL into a possible merger between Microsoft and Yahoo! has added a fascinating new aspect to the saga and will be watched with great interest as the drama plays out in weeks to come. If the Yahoo! board is reelected on August 1, there appears to be little chance the company will divest its search division but a complete takeover would remain a possibility if Microsoft can see value in a higher bid.

Since not even Microsoft can swallow Yahoo! without raising external funds, it is may not have an appetite for both companies. But maybe (just maybe!) there's room for a three-way deal that would see Microsoft cherry-pick the parts of AOL and Yahoo! it wants, leaving the rump of both companies under Icahn's stewardship with Time Warner as a substantial minority owner.