Is Yahoo On The Auction Block?
Shares of Yahoo! spiked Thursday after the Wall Street Journal reported a group of private equity firms may bid for the Web company.

Specifically the paper reported that Silver Lake Partners and Blackstone Group LP are exploring a bid in conjunction with AOL . The report also said Yahoo hasn't been involved in the talks yet.

Both AOL and Yahoo have declined to comment.

A deal would marry two companies that haven't been able to gain much traction in relentless competition with other online destinations like Google, Facebook and Twitter.

And even if they teamed up "it would still be a struggle to turn around both Yahoo and AOL," said ThinkEquity LLC analyst Aaron Kessler.

He said a deal could help them cut costs by eliminating redundant operations, but putting together two companies that both run search sites and other Web properties won't necessarily generate more revenue.

Nevertheless, if a deal does happen Yahoo is likely to ask for a big premium given that management feels the company's stock is underpriced, said UBS analyst Brian Pitz.



He pegged the lowest per-share offer that Yahoo would accept at $22, which would be a 44 percent premium over Yahoo's closing price of $15.25 on Wednesday.

Hear more about this chatter from Dan Niles of Alpha One. Watch the video now!