According to Bloomberg, AOL CEO Tim Armstrong is discussing the possibility with Yahoo advisers. This development follows the firing of Yahoo CEO Carol Bartz earlier this week.
However, CNBC has since reported that a “source close to Yahoo says no interest in a deal with AOL,” so this rumor may be nothing but wishful thinking on AOL’s part.
This isn’t the first time AOL and Yahoo have been linked. Yahoo was said to be considering a deal with AOL following its rejection of Microsoft’s unsolicited buyout offer in 2008. Last year, rumors again surfaced, focusing on a combination that would see AOL split its content and dialup subscription business (yes, it still exists), and merging the former with Yahoo.
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While no deal has come to fruition, both companies have continued to face their share of struggles and seen their valuations shrink. Yahoo’s now worth less than half of what Microsoft offered to acquire the company, and AOL has been on a similar trajectory since being spun off from Time Warner as an independent company.
And while AOL finds itself in the midst of integrating The Huffington Post and dealing with fallout surrounding another acquisition, Yahoo is currently being run by committee as it looks to hire Bartz’s replacement.
In other words, the conditions at both companies seem far from perfect when it comes to executing what would be a complicated merger. But given the desperate situation both are in, perhaps it’s finally time to see if two is better than one.
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