Yahoo AOL Merger

Yahoo and AOL started talking back in 2006 and 2007, however they could not agree on a price. This is what the London division of Reuters had to say

LONDON (Reuters) - Yahoo (YHOO.O: Quote, Profile, Research) is seeking to restart merger talks with AOL (TWX.N: Quote, Profile, Research) as a means of defending itself against an unsolicited bid approach from Microsoft (MSFT.O: Quote, Profile, Research), the Times newspaper said on Monday.

The paper, without citing sources, said Yahoo was also considering tie-ups with groups such as Google (GOOG.O: Quote, Profile, Research) and Disney (DIS.N: Quote, Profile, Research).

It said Yahoo and AOL had previously tried to join forces, but were unable to agree on the price of a deal.

None of the parties mentioned could immediately be reached for comment.

Best wishes. 

There are new rumors almost every day. This one makes little sense to me since both Yahoo and AOL are behind Google in the search ad space and are much more focused on e-mail, messengers and content. I also think it would pose an anti-trust issue and may not be authorized.

Here is the most current news on the Yahoo, AOL, Microsoft talks:

As expected, Yahoo's board of directors formally rejected Microsoft's buyout attempt for the company, arguing that Yahoo was worth more than the $44.6 billion offered. The Yahoo board met Saturday to discuss the deal, and issued a letter to the software giant Monday. Microsoft has yet to comment on the contents of that letter, which were leaked over the weekend.
While Yahoo's rejection was expected, it's unclear what happens next. Many expect Microsoft to raise its offer somewhat, perhaps by $5 billion to $12 billion. Yahoo reportedly is looking for something closer to $56 billion. But Yahoo is also risking a shareholder revolt by slowing Microsoft's purchase of the company. Stung by years of losses, many of Yahoo's shareholders would like to cash in on the heightened valuation of the company that has occurred in the wake of Microsoft's offer. Yahoo's shareholders lost $20 billion in just the previous three months.
Yahoo has spent the past week contacting partners and even competitors like Google to see what it can do to fight off the Microsoft purchase attempt. However, no rival suitor emerged, which wasn't surprising given the money involved. Only Google would have the financial wherewithal to pull off a Yahoo purchase, but that scenario is highly unlikely given the antitrust implications. And plans to partner with companies such as AOL or Google just weren't as lucrative as the Microsoft bid.
Microsoft also has an interesting option available to it: The company could approach Yahoo's shareholders directly with an offer, and force the ouster of Yahoo's board of directors. Such a move would be highly hostile, however, and would likely result in an exodus of key Yahoo executives, engineers, and other employees. Given the value of these people to the deal, it's unlikely Microsoft would take this course of action. 

I think its not, but it could be possible that they could merge if they think theres a good benefits for both party.