Takeover rumors are swirling around Yahoo again. AOL is in talks with several private equity firms over a possible "reverse merger" between the two Internet giants that would see AOL chief Tim Armstrong heading up the combined company, insiders tell the Wall Street Journal. One scenario being considered is for China's Alibaba Group to buy back Yahoo's 40% stake in the firm, which accounts for much of its current market value.
Reports of takeover talks have sent Alibaba's shares upward, though analysts aren't sure how much sense an AOL-Yahoo merger would make, despite the potential for the combined entity to be a more serious rival to Google for online advertising. Yahoo is working with Goldman Sachs to mount a defense against any takeover approaches, sources tell Bloomberg.