AOL, Yahoo talk merger: report

10 Sep 2011

1

America Online (AOL), once titan of the internet, has approached fallen giant Yahoo, which this week fired its CEO Carol Bartz, to discuss a merger, Bloomberg reported yesterday citing two unidentified sources.

AOL's chief executive Tim Armstrong has approached investment bankers from Allen & Co, who are working with Yahoo to gauge its interest in merging the companies, the news agency said.

The unlikely deal, if takes place, would combine two fallen internet giants that have squandered their once leading positions with the advent of emerging rivals in the fast-evolving internet industry.

Yahoo was once worth around $80 billion and is now worth just over $17.5 billion, while AOL was worth $147 billion, based on its inflated stock price at the time of its Time Warner acquisition in 2000, but is now worth a measly $1.7 billion.

Armstrong had earlier teamed up with several private equity firms and approached Yahoo last year, but Bartz had rebuffed the proposal, similar to her predecessor Jerry Yang rejecting a $47.5 billion offer from Microsoft in 2008.

With the exit of Bartz, Armstrong decided to revisit the idea, wherein he would become the chief executive of the combined companies, according to the Bloomberg report.

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