being acquired by America Online for about $166 billion in stock in what would be the biggest corporate merger ever. (AP file photo/Kathy Willens)

AOL swallowed up the much larger Time Warner back before the boom went bust — we all know how that went. Now there is talk of a reprise of sorts: That the now-again independent AOL will acquire the much-larger Yahoo.

The Wall Street Journal is reporting that AOL and a handful of private equity firms are cooking up — something. Nobody’s talked to Yahoo yet, the Journal reports, but there’s been a lot of chatter among the interested parties to combine AOL with Yahoo in some way, or take Yahoo private. By all means read the Journal article for the detail on various and sundry possibilities, which are too numerous and arcane to re-word.

Neither company commented for the article, of course, and the Journal says anything, including nothing, is possible at this early stage of the plotting.

But Yahoo shares are up 9 percent in early trading. AOL is up as well, as is Alibaba, the Chinese internet firm in which Yahoo has a 40 percent stake.

Yahoo’s market cap is about 7 times that of AOL, but with additional backing and some kind of plan it wouldn’t be impossible to alter Yahoo’s financial future, in theory. Sometimes two smaller entities can combine to make both stronger — Thomson + Reuters equaled Bloomberg’s market share — or to make survival possible — Sirius + XM radio reinvigorated the nascent satellite radio business.

But the one-time mightiest internet titan has been battling shareholder ennui and anger ever since former CEO Jerry Yang shunned what even then seemed like a substantially fair offer from Microsoft in a bid to remain private. Yang’s successor, the tart-tongued Carol Bartz, has added spice to the company’s public posture but hasn’t turned things around, and top executives are now leaving.

Despite its collection of the many of the most visited sites on the internet — and the continued ability to drive significant traffic to other sites — the parade seems to have moved on. Yahoo ceded search supremacy to Google ages ago and, whatever else you have, search remains the dominant entry point to the web.

As for AOL? We asked what Tim Armstrong was thinking when he jumped from Google to run the once dominant internet on ramp. Even a decade after the AOL/Time Warner debacle we’re wondering about the wisdom of the whole media giant thing that still seems to appeal to some C-level types. But combining forces on ads, especially as mobile takes off, wouldn’t be a bad way to stay in the game — even if together they’d still be running second to Google.

Follow us for disruptive tech news: John C. Abell and Epicenter on Twitter.

See Also:

• Yahoo and Microsoft Join Search Forces
• Microsoft Deal Brings Yahoo Bing, But No Zing
• Running the Numbers on a Possible Yahoo/Microsoft Merger …
• Taking Bets on the Yahoo-Microsoft Deal
• Microsoft’s Bid for Yahoo Is All About Big-Budget Brand Advertising
• Microsoft Says No Merger, Yang or No Yang; Yahoo Stock Tanks …
• AOL, Time Inc. Weighing Time Warner Down
• AOL to be Spun Off, Gets Second Lease on Life

Authors: John C Abell

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