AOL's Armstrong pitches Yahoo deal to investors, report says

AOL's chief executive sees a merger between the two once-prominent companies yielding a savings of up to $1.5 billion, sources tell Reuters.

Tim Armstrong, AOL's chief executive Google

AOL Chief Executive Tim Armstrong has been meeting with investors to push the idea of selling the company to Yahoo, Reuters reports, citing unidentified sources.

Despite Yahoo's recent leadership shakeup, Armstrong is pitching the idea that the two companies have squandered their once-preeminent positions on the Web and would have a stronger position paired up than going it alone.

"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 AOL shareholder told Reuters.

Armstrong believes a merger between AOL and Yahoo could end up saving the companies up to $1.5 billion by eliminating redundant efforts in data centers and news sites, another source told Reuters.

An AOL spokesperson declined to comment.

Even before Yahoo fired Carol Bartz as its chief executive, rumors of a merger between AOL and Yahoo had surfaced. Armstrong reportedly approached Yahoo last year about merging the companies but was rejected while Bartz was running Yahoo.

While both companies have some valuable assets such as huge user bases, they both have failed to keep up with Internet trends and are suffering from declining sales.

Yet despite its problems, Yahoo has been attracting a lot of attention from possible suitors. Those said to be interested in taking over Yahoo include Silver Lake and China's Alibaba , venture capitalists Andreessen Horowitz , and even, once again, Microsoft .

Adding to the intrigue is a report that Yahoo co-founder Jerry Yang is looking to take the company private in an equity deal that could see Yahoo selling off its international assets, paying off debt, and then focusing on its U.S. operations.

AOL hired Armstrong away from Google in 2009 with the hopes that the Web giant's advertising sales guru would help revive the ailing AOL. However, Armstrong, who is best known for developing Google's online advertising business, has had trouble competing for ad dollars with his former employer, as well as Facebook and Yahoo.

 

Join the discussion

Conversation powered by Livefyre

Show Comments Hide Comments
Latest Galleries from CNET
Uber's tumultuous ups and downs in 2014 (pictures)
The best and worst quotes of 2014 (pictures)
A roomy range from LG (pictures)
This plain GE range has all of the essentials (pictures)
Sony's 'Interview' heard 'round the world (pictures)
Google Lunar XPrize: Testing Astrobotic's rover on the rocks (pictures)