More on Yahoo-AOL Combination Possibility: Financial Models, Savings Etc

From the same Merrill Lynch report, some more interesting aspects of a possible Yahoo-AOL deal if it happens: “Our models suggest purchasing AOL would be accretive for Yahoo! in year 2,
even if it were to pay $18bn (20x 2007E EBITDA) for only the advertising portion of its business and assuming only $100mn in cost savings. Purchasing all of AOL would be even more accretive given the low multiple of its access business, but this seems less likely. Our colleagues have noted in previous work that purchasing Yahoo! would be only mildly dilutive for Microsoft. Even at 20x EBITDA, AOL

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