The story released today has Jonathan Miller, former CEO of AOL, out to pitch private equity fund for raising $28 – $30 billion in an attempt to acquire Yahoo.

Miller, in association with his partner at Velocity Interactive Group, Ross Levinsohn, was also holding the center stage in the weekend story released by The Times.

Sources reveal that while Levinsohn & Miller have been maintaining regular contacts with Microsoft & Yahoo shareholders and executives for months in regards to the future of Yahoo, they haven’t yet made any discussions with private equity funds for raising capital in order to take over the organization.

Levinsohn & Miller, with other partners of Velocity, have been busy in raising a $300m fund over the period of last year. And with the reports, they have only received commitment for $150m. So, try to raise $30b for taking over Yahoo appears more than far-fetched.

Another reason, which confirms the story to be incorrect, is that the story makes little sense – Miller’s bounded with AOL by a non-compete agreement. It prohibits him to serve as employee or board member of particular companies, which include Yahoo!. In fact, this non-compete agreement is amongst the reasons why he wasn’t able to join the board at Yahoo last summer. This agreement wouldn’t terminate until coming March. Henceforth, getting into any term deals with Yahoo! is impossible, especially without explicit consent of AOL. They weren’t in the position to give the permission last summer. There’s no ground for believing that they’ll allow it now.

As a consequence to WSJ’s story – there was a jump in Yahoo’s stock by around 11.7%, prior to coming down at the end. Investors lost huge sum and SEC will be interested in knowing the source of this news.

This is an interesting rumor to keep an eye on for several reasons. First and foremost, AOL offers a lot of content through a number of services. This would fit in well with Yahoo’s goal of increasing their performance in the online advertising world. While Google is the king of this world right now, a Yahoo-AOL merger could definitely mean bad news for the company.

Moving on, many industry insiders feel that Google would actually encourage this deal. The reason for this is quite simple: they perceive Microsoft as an up and coming threat, and by keeping them away from Yahoo they will have a much more difficult time making up ground.

If all of this is not interesting enough, Google already owns a five percent stake in AOL. They purchased this share of the company in 2005 for $1 billion. Although Google only owns a small piece of the company, it would be interesting to see how this is handled should a Yahoo and AOL merger take place.

Although nothing has been confirmed, there are many who feel that this deal is just a matter of time. With that being said, some experts think that this will send both Yahoo and AOL down the tubes even faster. Alone, both companies are having a difficult time keeping up with the competition. Would a merger of two sliding companies result in a quicker downfall? This question is impossible to answer, but if this deal goes through it is safe to say that there will be plenty to talk about in the months to come.

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