This is getting ridiculous.
It appears Yahoo may get the best of all worlds.
Yahoo and AOL are reportedly closing a deal to combine their operations — an action that will help fortify Yahoo against Microsoft's attempt to buy it.
News of the liaison followed a report that Yahoo made a tentative agreement to serve Google ads on its search pages.
The AOL deal includes the repurchase of Yahoo shares at a price higher than Microsoft's offer, which was about $31 per share. Time Warner will fold AOL into Yahoo and exchange cash for 20 percent ownership of the combined units.
Yahoo first considered merging with AOL and outsourcing search advertising to Google in early February.
But Microsoft is not easily thwarted. The Wall Street Journal reports Microsoft is talking with Rupert Murdoch of News Corp. to propose a joint bid for Yahoo. No agreement has been reached.
Last month, after speculation that News Corp. and Yahoo might pair up, Murdoch publicly announced he would not battle Microsoft for the search company.
A combination of News Corp., Microsoft and Yahoo would make siblings of the three biggest online properties: MySpace, MSN and Yahoo.