Yahoo Passes on Possible AOL Deal

Yahoo on Thursday acknowledged that CEO Terry Semel sat down with Time Warner Chairman Richard Parsons about orchestrating a deal with America Online, but said it walked away from the table once it learned of the terms. Google and Microsoft, however, are continuing their discussions.

Yahoo claims it didn't make an offer for AOL and "never looked back" after passing on the deal in October. Microsoft has been talking with AOL the longest, reportedly trying to convince AOL to drop Google and begin using MSN's search engine across its dial-up service and Web properties. Although AOL's subscriber business is slowly dying, it still holds a large chunk of the lucrative Internet advertising market.