Here we go again. For the umpteenth time, AOL is reportedly trying to merge with Yahoo. AOL CEO Tim Armstrong (pictured above at center, hand raised) is said to have spent several weeks trying to persuade AOL’s largest shareholders that they should sell the whole company to Yahoo, saying that combining the two struggling 1990s Internet giants could save a collective $1 to $1.5 billion, Reuters reports.
The proposed deal would entail breaking up and selling AOL’s various assets separately. Yahoo would likely be more interested in AOL’s newer, flashier online media acquisitions, The Huffington Post and TechCrunch.
Whether Yahoo would want Patch is a whole different question. Armstrong was an early investor in Patch, the hyperlocal news service that AOL bought shortly after he took over. It has become a wild card in AOL’s turnaround strategy. Armstrong said he would explore selling that division off if it didn’t become profitable soon.
Even less understood is just who would be interested in AOL’s legacy dial-up internet service, which still makes up the bulk of its revenue (although ad revenue is finally getting closer, according to the company’s third quarter results.)
That said, investors have reportedly warmed up to the idea, but are skeptical that Armstrong can actually pull it off.
And yet, Yahoo’s management is said to be pursuing it’s own separate plans to breakup, Former Yahoo CEO and co-founder Jerry Yang is also reportedly attempting to wrangle together private equity firms to take Yahoo off the public market.
Microsoft was even reportedly considering making a new bid for Yahoo, after having been rejected twice publicly in 2008.
It’s unclear exactly how Yahoo’s breakup plans and supposed suitors will impact AOL’s plans. All three, after all, in September teamed up to take on Google in the display advertising business, All Things D reported.
But if there’s one thing that’s sure, it’s that AOL CEO Armstrong needs to act fast if he wants a deal to work. Reuters reports that he wants out of the company in the next 18 months and shareholders aren’t exactly thrilled with his tenure over the past two years since taking over the reins in 2009. That said, the report says he would be interested in sticking around to lead the combined company if the merger were to go through.
Full disclosure: I was employed by AOL as a staff news blogger from January to November 2010, before the company acquired The Huffington Post in February.
