Will Yahoo! Inc (YHOO) and AOL Inc (NYSE:AOL) Manage a Healthy Symbiosis or Form a Tech Frankenstein?

A big part of Yahoo! Inc. (NASDAQ:YHOO)‘s market capitalization of $40.35 billion is due to Alibaba Group Holding Ltd (NYSE:BABA), if not even all. Marissa Mayer hasn’t given the impression of being able to handle the critical situation, causing an activist investor to suggest a merger with AOL, Inc. (NYSE:AOL), reported Bloomberg. Yahoo! Inc. (NASDAQ:YHOO)’s currently trading at little to $40.75, showing an almost 4% growth after the letter from Starboard Value LP, but this is not necessarily a sign that the idea should be blindly pursued by both companies.

Yahoo! Inc. (NASDAQ:YHOO)’s features could well integrate with those at AOL, Inc. (NYSE:AOL), and the merger proposal is currently being analyzed as a potential strategy. It may create a recycled company with smaller cumulative costs but bigger perspectives. However, some sources believe that these benefits will either be futile or too small to make a really big change.

Apparently the merger could have a happy ending if the two companies manage to work well together. Also, technically speaking there is a certain predisposition for a benevolent chain of upcoming events, but it’s not necessarily a sure thing that AOL, Inc. (NYSE:AOL)’s Adap.tv will be as efficient with technology provided by Yahoo! Inc. (NASDAQ:YHOO) or with its content. There’s also the fact that advertising spending is mostly dominated by Google Inc (NASDAQ:GOOGL) and Facebook Inc (NASDAQ:FB) leaving the merged shares of the two rival tech dwarfs to be a sheer 3.5% out of the total $140 billion.

Yahoo! Inc. (NASDAQ:YHOO) still has strengths to grow after combining powers with AOL, Inc. (NYSE:AOL), but the progress might prove large with respect to previous values, but not compared to numbers from competitors. Moreover, there might be problems related to the mergers of the management teams and some other issues referring to abstract matters. The last way to save some value for the company would be through a tax trick that would allow the company save at least something out of the 38% margin on money to be attained from Alibaba Group Holding Ltd (NYSE:BABA)’s stock.

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