Olmert will never form a party with Livni, both want to be PM not the others right hand man/woman. They will either form their own parties and with both of them having big egos its not hard to envisage. Livni will almost certainly form her own party and she has plenty of Kadima defectors to back her. Olmert seems to be more popular in Kadima than he has ever been so Olmert may decide wait till after the election which Kadima will do disastrously in and if he thinks they will oust Mofaz & he has a good chance of replacing him as party leader then he will return to Kadima. If he is serious about a political comeback thats probably the best tactic for Olmert to go for. If he forms his own party it doesn't come free with lots of voters the way it would if he was leading Kadima. I am not sure that its even possible for Olmert to stand at this election because he doesn't have a party yet and if he wants to stand at the election he must officially register it. He can't return to Kadima as their leader because they have already held their primaries so short of standing as an independent or joins an existing party in a non leadership role there is no way he can stand at this election.