Yahoo Facebook - to be or not to be - I've seen a couple of references to a potential Merger/Acquisition brought up over the last 24 hours including one from Deep Jive Interests.

Last year Mashable and BusineessWeek said Yahoo was in talks to buy Facebook for 1 Billion Dollars - Yahoo-Facebook for $1 Billion? and said then:

"…There have been Facebook acquisition rumors before, of course - back in March, the company reportedly turned down a $750 million acquisition offer, deciding to hold out for $2 billion (although the facts were sketchy). With MySpace seeming like a steal at $580M (although many still debate this), $1 billion is high but not astronomical. Facebook isn’t as large as MySpace, of course - at last check, they had 9 million or so users against MySpace’s 100 million plus. But with plans to open up the site beyond colleges and companies, there’s certainly room for growth. It could, of course, come to nothing: the Bebo-BT acquisition offer ($552 million) was never confirmed, and there have been subsequent rumors of a Bebo acquisition by Viacom. "

And that was almost a year ago!  Fast forward to August 2nd when the New York Times came out and said Yahoo should buy Facebook in Should Yahoo Try Again for Facebook? 

"..But an analyst at Bear Stearns suggests that Yahoo is also being left behind by sites such as MySpace, Facebook and LinkedIn — and said that an acquisition could be a good way to catch up."

"…Based on some fairly rough assumptions — Facebook, as a private company, doesn’t disclose financial figures — Mr. Peck said Facebook could be worth between $5 billion and $6 billion to a potential buyer.

He uses various methods to come up with a price, but one is based on Facebook having a projected EBITDA of $108.7 million in 2008 and a price-earnings multiple of 45 (not far from what Microsoft paid for aQuantive or Google paid for Doubleclick in deals earlier this year). By that math, Facebook would be valued at $4.9 billion.

Yahoo doesn’t have that kind of cash — it reported $2.3 billion in cash and marketable securities in its latest quarterly filing — but with a market capitalization of more than $30 billion, it has ample stock it could use as currency."

I'm going to take a position on this question.   I think Yahoo should buy Facebook for 2.5 Billion dollars - I don't think it's worth 5 Billion but I would say that the acquisition makes sense to my way of thinking.

"…Facebook’s recent success could make it even more desirable to Yahoo — but more unattainable as well. Responding to rampant speculation about whether Facebook might be for sale, one of its investors recently told The Deal that a deal seemed highly unlikely, in part because because potential suitors weren’t offering anything near what Facebook considers a fair price.

What’s fair to Facebook? Peter Thiel, a Facebook director and early backer, told The Deal that the company could get $7 billion to $10 billion in a sale.

That may sound expensive in the extreme. But it is worth noting that, barely a year ago, Yahoo’s $1 billion offer seemed pricey as well."

Here's the thing .. no one in their right mind will pay 7 - 10 Billion Dollars for a Social Network that could, on the face of it, disappear in a  year or two if it's not managed right  - or something else better in Social Networking comes along.

But at 2.5 billion or even 3 billion, I could see a sale like this making sense - and offers a lot of possibilities of merging much of Yahoo's other properties and it's marketing intelligence into the mix - something Facebook probably can't do alone.

I think the acquisition of Facebook by Yahoo is probably a good thing if they can do it at "fair" price.