SAI is reporting that the Yahoo!/AOl merger is a done deal, and will be announced tomorrow.

The purchase price: $8-10B.  This obviously assumes that YHOO is buying all of AOL.com, including the access business.

Yahoo! is trading at $18B in market cap.  Given that YHOO has all of $1B of cash on hand, this is obviously a stock deal… meaning that YHOO shareholders will have 55-60% of the merged company.  That is not a catastrophe, admittedly, but you have to put this in the context of what has happened in the past 9 months.

Can you imagine the reaction from YHOO shareholders:

- first Jerry Yang turns his back to MSFT’s generous $44.6B offer.

- then YHOO loses more than half of its value less than a quarter after MSFT pulls its offer.

- now this?

Yikes.

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