Report: AOL considering bid for Yahoo

The company exploring the idea of partnering with private equity firms.

AOL is considering partnering with private equity firms to bid on acquiring Yahoo, the Wall Street Journal reported late Wednesday.

Silver Lake Partners and Blackstone Group are among those interested in Yahoo, and they'd consider doing it with or without AOL.

The Journal said several scenarios involve merging AOL and Yahoo and selling off Yahoo's stake in Alibaba, a Chinese Internet firm.

Blackstone's portfolio includes investments in the Weather Channel, Seaworld Parks & Entertainment, Harrah's Entertainment, Nielsen and Cumulus Media. Silver Lake specializes in technology with a portfolio that includes investments in Skype, Sabre and Intelsat.

Yahoo, AOL and the investment firms declined comment, but investors Wednesday traded shares of Yahoo as if they knew something was afoot. Yahoo shares closed 6% higher at $15.25 during regular trading on volume that was more than twice normal, and shares soared 13% after hours when the Journal story was posted online.

At the end of regular trading Wednesday, Wall Street valued Yahoo at $20.6 billion, though about $10 billion of that can be attributed to its stake in Alibaba.

Taking into consideration Yahoo's cash on hand and debt and subtracting Alibaba's value, Yahoo is worth only about $7 billion based on its stock price, though investors will want a significant premium.

Still, it's likely they'd be offered less than the $31 a share Microsoft offered for Yahoo nearly three years ago, a deal that would have valued Yahoo -- including its Alibaba stake -- at $45 billion.