AOL and Yahoo Are Considering Merging

Posted by at 1:55 pm on September 9, 2011

AOL and Yahoo are considering merging in the wake of Carol Bartz’ ouster from Yahoo’s CEO spot, according to leaks. AOL chief Tim Armstrong purportedly believes uniting the two would strengthen them and was in talks with Yahoo advisors. He may have wanted a deal as early as last year, Bloomberg’s Emily Chang said, but was shot down as long as Bartz was in the lead.

Under one supposed plan, Yahoo would buy AOL but take on Armstrong as its leader.

In a response rumor, however, CNBC pointed to a “source close to Yahoo” that alleged Yahoo had no interest in making such a deal. The divide might stem from AOL’s considerably smaller but declining status, where it has dropped down to a total value of about $1.6 billion where Yahoo is still worth $18.2 billion and generally more steady.

Even if AOL isn’t considered a factor, leaks have hinted that it’s considering major options that might include a sale. A full three banks, Allen & Co., JPMorgan, and UBS Investment Bank have each been seen conducting a “strategic review” that would at the least outline its strategy.

Yahoo hasn’t turned itself around in a significant form during Bartz’s tenure and has been looking to improve its reputation for web content and beyond. Microsoft’s Bing search integration has had virtually no payoff, while it has already been considering a bid for Hulu that would give it a full video service to drive users. AOL has faced a steeper climb as its attempts to become a media company have faced an uphill struggle with possible and real news site defections.

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