AOL's Armstrong keen to merge with Yahoo

13 Oct 2011

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Tim ArmstrongAmerica Online (AOL) CEO Tim Armstrong has held meetings in the past couple of weeks with top shareholders to push the idea of selling AOL to Yahoo, Reuters yesterday reported, citing sources with knowledge of the discussions.

While Yahoo's is currently in the process of conducting its own strategic review after firing CEO Carol Bartz last month, Armstrong is still trying to drum up shareholder support for a deal with Yahoo, presenting it as an alternative to going it alone as an Internet media company, the news agency said.

"The focus in the meeting has gone from a year ago of being around the fundamentals to now being how could you carve this up, what are separate assets worth, are there ways to sell off the business to extract value from them," a top 20 AOL shareholder who attended one of the meetings told Reuters.

Armstrong believes the merger could end up saving the companies up to $1.5 billion by eliminating overlapping data centers and news sites such as sports, entertainment and finance, another major shareholder told Reuters.

The latest on Yahoo comes after Bloomberg reported last month that Armstrong has approached investment bankers from Allen & Co, who are working with Yahoo to gauge its interest in merging the companies.

The unlikely deal, if it materialises, would combine two fallen internet giants that have squandered their once leading positions to emerging rivals in the fast-evolving internet industry.

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