AOL Attempting to Buy Yahoo
mashable.com
mashable.com
Would TC still trash Yahoo in their articles?
YHOO: 20.56 billion
AOL: 2.70 billion
Plus AOL is not doing well. They are losing 20-30% of revenues every year for the last 4 years.
AOL have $2.7B in revenue, that combined with an injection of money from a hedge fund or two make an LBO (leveraged buyout) very viable. AOL and the hedge funds would only need to put up $500M-$1B
They would reverse-merge Yahoo into AOL, and I have a feeling that the market cap of the new entity would be greater than the sum of its parts.
AOL + Yahoo would become the largest content provider on the web, with a global audience. Throw in an ad company or two and you have a good business (and a business with a purpose, unlike Y! atm).
That's an interesting use of the word 'only' :)
I agree it is a possibility though, but such mergers usually don't work out well in the long run because of conflicting priorities.
It's amazing how much staying power these 'old giants' have, it would not surprise me at all if it did happen but I'm more skeptical about the aftermath of such a merger.
One thing is for sure, lots of people will lose their jobs. That seems to be the one constant when big companies merge.
And you bet there would be layoffs if this happens.
I think the chances of it happening are slim though. They rejected $40B from MSFT, they would look really stupid to accept half of that now (personally I think they should have accepted the MSFT deal, I owned stock at the time)
First of all, revenues are not profits. That's not the money AOL gets to keep. AOL's expenses eat most of the revenues (http://www.google.com/finance?q=NYSE:AOL&fstype=ii), even in good quarters.
But let's say, AOL had $2.7B. You add $500M-$1B to it. You are nowhere near the $10B you need.
I didn't link revenue to the money they need for an LBO
"AOL Inc. and several private-equity firms are exploring making an offer to buy Yahoo Inc."
http://www.marketwatch.com/story/aol-loses-11-billion-on-res...