Yahoo and AOL do due diligence on deal

Merger may finally be on the way

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30 October 2008 11:03 GMT / By Katie Scott

They're not promising anything but Yahoo and AOL may be one step closer to a merger.

The two companies have announced that they have started to do due diligence on a possible deal - to figure out what a merger could mean in terms of both money making and money savings.

A source told Reuters that the two companies have engaged in "meaningful" due diligence about a possible combination for the past couple of weeks.

Rumours of a merger between the two businesses have been circulating for most of this year, including during the period Yahoo was fighting off a takeover bid by Microsoft.

Both Time Warner, who owns AOL, and Yahoo have both been hit by the economic downturn. Time Warner shares are down about 45% from last year, while Yahoo shares have fallen about 63%.

By merging AOL's content and advertising busines into Yahoo, the two companies may be better set to weather the storm.

Neither AOL or Yahoo are commenting on the reports.