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AOL's Armstrong pitches Yahoo merger, report says

The chief executive of AOL has reportedly approached Yahoo to consider merging the two struggling Internet companies.

AOL Chief Executive Tim Armstrong has reached out to Yahoo to see if the company, which just fired its CEO Carol Bartz, is interested in merging the two companies, according to Bloomberg, citing two unnamed sources.

AOL CEO Tim Armstrong.
AOL CEO Tim Armstrong Google

Evidently Armstrong has talked with private equity firms as well as Allen & Co., the investment bank working with Yahoo on examining strategic options, according to the report.

A deal, if it were to happen, would pair two foundering companies that have squandered their once preeminent positions in tech.

And rumors of the two companies combining have surfaced before, only to disintegrate with time. According to Bloomberg, Armstrong approached Yahoo last year about merging the companies but was rejected while Bartz was running Yahoo. He decided to revisit the idea after Bartz's firing. Under one of the proposals, Bloomberg reports, Armstrong could become chief executive of the combined companies.

While both companies have some valuable assets--huge user bases, among them--they both have crippling problems. Both companies have failed to keep up with Internet trends. They both have legacy businesses that haven't performed. And they're both suffering from declining sales.

Neither AOL or Yahoo responded to requests for comment.

Updated with details and analysis at 1:03 p.m. PT.