Yahoo brings in AOL to evade Microsoft

Yahoo brings in AOL to evade Microsoft

The battle for Yahoo hots up as AOL and News Corp enter the fray

Yahoo is understood to be close to joining forces with AOL to ward off the predatory attention from Microsoft.

Under a deal being discussed Yahoo would buy back billions of dollars worth of its own shares, receive an investment from AOL's parent Time Warner, gain control of AOL and in return give up 20 per cent of the merged group, reports said.

But it has also emerged that Microsoft and News Corp could launch a joint offer for the search engine giant, which rejected a $44.6bn (£22.5bn) hostile bid from Microsoft earlier this year.

A successful deal would combine Yahoo with Microsoft's MSN and MySpace, owned by News Corp.