Yahoo! to buy Excite@Home?

Yahoo! and Excite@Home reportedly have held talks over the past six weeks about a possible deal in which Yahoo would buy Excite@Home for more than its current market value of $17 billion.

The report comes just two months after the completion of the $6.7 billion Excite@Home merger. If completed, the deal would provide Yahoo with the sixth most popular Internet portal and put the company in a prime position for broadband access.

Sources say Yahoo doesn't want to operate an infrastructure company like @Home, which provides high-speed Internet access over cable lines. At the same time, AT&T, the controlling shareholder in Excite@Home, wants to retain influence over the @Home business.

One scenario has Yahoo absorbing Excite and spinning out @Home into an independent company in which Yahoo and AT&T would have sizable stakes.

Sources close to all three companies describe the recent talks as preliminary, warning that much more work would be needed for such a deal to be completed.

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