Yahoo-AOL merger deal in the works?

In the “What the … ?” department, Yahoo’s latest counter-move to Microsoft’s acquisition desires is to court AOL (part of AOL Time Warner). In a rather complicated sounded potential deal:

“Under the terms being discussed between Yahoo and Time Warner, the latter would fold its AOL unit into Yahoo and make a cash investment in return for about 20% of the combined entity, people familiar with the situation said. The deal, which wouldn’t include AOL’s dial-up access business, would value AOL at about $10 billion. As part of the deal, Yahoo would use the Time Warner cash and additional funds to buy back several billion dollars worth of its own stock at a price somewhere in the middle of the range between $30 and $40 a share.”

So this sounds like Yahoo wouldn’t lose all autonomy. In fact they would regain some control of the company as well as add some additional cash. Together the 2 companies would strengthen their combined online assets and services. Not a bad deal for both of them.

via Silicon Alley Insider and the Wall Street Journal.