Yahoo -- It appears that Yahoo's core business (search, Internet commerce, etc.) has fallen way behind Google and Microsoft and most observers don't give it much chance of closing the gap. Yahoo's current stock price reflects the company's investment in Alibaba (the gigantic Chinese online retailer) and in Yahoo Japan. Recently, an activist investor, Starboard Value, has suggested that Yahoo's best bet is to buy or merge with AOL (America Online) so that the combined entity has the scale, reach, and traffic to compete with Google and Microsoft. I want you to investigate this: does an acquisition/merger make sense from Yahoo's point of view? Specifically, what is the strategic logic of this combination? Does an acquisition of Yahoo of AOL make sense or should it be a merger of equals?

Write a 7 page analysis organized as follows:
• The problem definition of why this acquisition will not work
• The conceptual tools that you would use for the analysis including a roadmap of how you are going to go through the analysis that would lead to your conclusions.
• The analysis itself.
• What is your key conclusions

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As there has been increase in the competitiveness in the operating environment, organizations are using a range of strategies to consolidate and strengthen their market share so that they can benefit from scale and scope economies. Innovation is the need of the hour and sustaining market share is becoming very difficult for companies. In this report, two erstwhile giants AOL and Yahoo have been the focus that have been consistently losing their market share to competitors Google and Facebook. The possibility of a merger deal between the companies and the resulting value has been analyzed using strategic and financial analysis to determine whether the merger deal should go ahead.

Problem overview
Yahoo and AOL have online advertising as their core businesses. These businesses have been on a decline as the competitors are dominating the market with their size. Saba and Oreskovic (2014) have estimated that the merger of these entities would lead to synergistic benefits in terms of $1 billion of cost savings and the entities would also be able to increase their size and market share so that they can take over their closest rival Facebook. Since both of them are players in the online content business, they can pool their resources and remove duplicates along the supply chain.

As reported by Baig (2014), merger between the two companies is not a strategic move since merging two big companies does not guarantee success. Given the current operating competitive environment of Yahoo and AOL, this move would just lead to creation of a big company and would merely buy them more time before they fail....
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