Anyone want to take a shot at what’s behind Time Warner’s repurchase of a 5 percent stake in AOL held by Google? Time Warner sold the stake in December 2005 for $1 billion. Now, it has bought it back for $238 million — a nice job of selling high and buying low. Time Warner plans to spin off AOL by the end of the year.

The 2005 deal implied a chunky price tag of $20 billion for AOL. While it may not be exactly apples to apples, the repurchase implies a value of about $5.7 billion.

Brigantine Advisors analyst Colin Gillis said the implied $5.7 billion represents a “floor valuation ” as AOL moves toward a spinoff. If that’s true, then Google not only overpaid, but undersold.

Then again, with AOL expecting about $90 million of restructuring charges in the last nine months of 2009, and $58.3 million in charges already taken, related primarily to layoffs and closing facilities, maybe Google got out cheap.

So Yahoo and Google scaled back the terms of their search advertising deal in what looks like a last-ditch, attempt — at least for Yahoo — to get it past U.S. regulators.

Some analysts called it the Band-Aid deal, while others said it smacks of desperation.

Frost & Sullivan’s digital media global director Mukul Krishna said the revised terms were “more of a Band-Aid than the extensive surgery” Yahoo needs.

Barclays Capital’s Douglas Anmuth had a similar take: “We have long viewed the search outsourcing deal as a Band-Aid-not-a-panacea for Yahoo, but compromised terms or an outright rejection of the deal would likely force Yahoo to consider other strategic measures.”

Those “other” measures are a merger of Yahoo and Time Warner’s AOL unit, or Yahoo shareholders’ ultimate dream: Microsoft coming back to woo Yahoo.

Eric Jackson, the dissident Yahoo shareholder who sold his fund’s 3 million Yahoo shares in September after being convinced regulators would nix the Google deal, said: “You just gotta hope that the love bug bites Microsoft again and they want to come back.”

Sanford Bernstein analyst Jeffrey Lindsay said he expects Yahoo’s deal with Google to falter and for Microsoft to come back next year with a bid of around $20 per share. That may not sound too bad considering Yahoo is trading at $13, but remember that the last Microsoft offer had been for $33 a share.

Meanwhile, Needham & Co’s Mark May outlined six scenarios in his research note this morning:

1. Regulators approve Yahoo-Google deal with no additional conditions, which would likely cause short-term jump in Yahoo shares and add no more than $80 million to $100 million to Yahoo’s earnings before interest, taxes, depreciation and amortization in the first year. Remember, Yahoo had said it was expecting a cash flow boost of between $250 million and $450 million.
2. Regulators approve, but with stipulations, which could lead the companies to call the deal off, or if they stick with it, even smaller financial benefits.
3. Deal terminated, Yahoo sells search to Microsoft — but May says that would be a bad long-term strategy for Yahoo because it wouldn’t add much to earnings.
4. Yahoo-Google deal terminated, Yahoo and AOL merge. May says this deal would be problematic and not good for shareholders, listing integration challenges and cultural differences among other issues.
5. Microsoft buys all of Yahoo, which is what shareholders seem to want, but does Microsoft want it? May estimates Microsoft might offer between $20-$25 a share for all of Yahoo, but Yahoo’s board would probably not want to negotiate at that price.
6. Yahoo-Google deal terminated, Yahoo continues status quo. May calls it the “worst possible scenario” of the six he laid out.

The thing is, Yahoo just might choose to do nothing if the deal with Google doesn’t get through regulators. But if Yahoo does that, “stakeholders will want some blood, and Jerry (Yang, Yahoo’s CEO) will be a target,” Frost’s Krishna said.

Like a bad soap opera, the Internet storyline is getting more and more convoluted. The tale so far: Microsoft Corp, spurned by Yahoo Inc, is courting Time Warner Inc to allow a union with Internet division AOL. But Yahoo, which turned its back on Microsoft’s $47.5 billion bid, also wants AOL’s hand. These talks have taken on a new urgency ahead of Yahoo’s Aug. 1 shareholders meeting, a source familiar with discussions told Reuters on Tuesday. How either marriage will work is not immediately clear, but any combination will likely redraw the landscape for advertising on the Internet. So why is AOL so attractive? Both Yahoo and Microsoft view it as beneficial to leverage their positions in the Internet marketplace, where search giant Google Inc dominates. Stay tuned.

But good soaps are not only made in America. It seems the Germans are good at them, too. Tires-to-brakes maker Continental rejected Schaeffler Group’s surprise 11.2 billion euro ($17.8 billion) bid, saying only the family owned firm stood to gain from the offer which was too low. Late on Tuesday, the ball-bearing maker announced the terms of its proposed takeover after winning control of more than a third of Continental’s shares through a web of options organized for it discretely by banks. Schaeffler’s bearings are found in London’s landmark Ferris wheel, the London Eye and it also makes high-precision bearing supports for the U.S. space shuttle and the European launch vehicle Ariane, not that that has any bearing on a deal.

Some suitors, however, do get lucky. Mining company Cleveland-Cliffs Inc said on Wednesday it would acquire Alpha Natural Resources Inc for about $10 billion in cash and stock to expand its coal assets. Stockholders of Alpha, an Appalachian coal producer, will receive 0.95 of a Cleveland-Cliffs common share and $22.23 in cash for each of their common shares when the union is completed. Based on closing stock prices on Tuesday, the deal values Alpha at $128.12 per share, a premium of 35 percent, the companies said in a statement. The combined company will be renamed Cliffs Natural Resources and will include nine iron ore facilities and more than 60 coal mines located across North America, South America and Australia.

More deals of the day:

** Shareholders of utilities Suez and Gaz de France are set to approve a long-delayed 100-billion euro ($159.5 billion) merger, creating Europe’s second-largest electricity and gas group.

** The Co-Operative Group has agreed a long-awaited deal to buy Somerfield for 1.57 billion pounds ($3.1 billion) to strengthen its position as Britain’s fifth-biggest food retailer.

** Russian real estate company LSR said it had acquired a property developer in Yekaterinburg in the Urals region for 100 million euros ($159.5 million).

** Bank Hapoalim, one of Israel’s largest banks, said it was in advanced talks to buy at least 75 percent of Russian mid-sized SDM Bank at a value of $142 million.

** Irish healthcare services company United Drug said it had bought U.S. packaging maker Sharp Corporation for $99 million in cash.

** The board of Australian energy firm Roma Petroleum NL said shareholders should accept the revised A$49.4 million ($48.4 million) takeover offer from Queensland Gas Co Ltd.

** Parsvnath Developers Ltd said it will invest 4 billion rupees for a 38 percent stake in the Nanocity project in northern India.

** Shares in SK Telecom, South Korea’s top mobile carrier, fell early after a CNBC report that it was negotiating to buy Sprint Nextel Corp , the No. 3 U.S. mobile service.

** Swiss engineering group ABB said it will acquire U.S. transformer company Kuhlman Electric Corporation from private equity firm Carlyle Group for an undisclosed sum.

** EPIC Energy Ltd said it had acquired Sathian Sun Power Systems, a solar energy products supplier based in the southern state of Tamil Nadu, for an undisclosed sum.

** Airbus said it has agreed to set up a venture with Harbin Aircraft Industry Group (HAIG), the parent of Hafei Aviation Industry Co, to make aircraft components.