20 February 2008
US internet giant AOL has commenced talks with Yahoo! to prevent it being taken over by Microsoft, according to a report.
The Sunday Telegraph reports that AOL, part of media giant Time Warner, has held talks with the online search engine’s advisers to examine the chances of reaching a deal.
This has raised the prospect of one of the biggest takeover battles this year after Microsoft’s offer of $31 a share, valuing Yahoo! at more than $42bn (£21.4bn), was rejected last week as substantially undervaluing the business.
Media mogul Rupert Murdoch’s News Corporation has already moved to scupper Microsoft’s bid with plans to merge its online interests with Yahoo
It is thought it would buy a 20 per cent stake in Yahoo!, in exchange for assets including MySpace.
Shares in Microsoft have fallen about 10 per cent since it launched its bid, wiping nearly $35billion off its market value.
Microsoft could decide to increase its offer or force the Yahoo! board into talks by building a stake or by pitching an offer direct to Yahoo! shareholders.
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