AOL CEO Pushing For Yahoo Merger

AOL Inc.’s (NYSE:AOL) Chief Executive Officer, Tim Armstrong has been holding meetings with company shareholders to convince them to acquire Yahoo Inc. (NASDAQ:YHOO), according to unnamed sources familiar with the ongoing talks.

Armstrong has been pushing the idea that the acquisition of Yahoo could translate into more than $1.5 billion worth of savings in operational costs. According to the sources with the knowledge about the ongoing discussions, Tim has been meeting with major shareholders to push the purchase of Yahoo Inc.

Even though the Yahoo board has put the possibility to a merger with AOL as a low possibility, Tim is however pushing the company board for a possible bid for Yahoo. A bid for Yahoo is being pushed as an alternative to being an alone Internet media company. A AOL shareholder said that meetings with the CEO are moving away from the fundamentals of running a company to the possibility of Yahoo acquisitions. The meetings have been estimating the value of each asset owned by Yahoo and what it can be worth.

According to Tim, the merger between AOL and Yahoo can lead to cost cutting of more than $1.5 billion to $1 billion. These cost savings can come from overlapping duplicate sports, entertainment, finance and news sites, data centers and other areas. Tim has also tried to convince shareholders that the merger would also appease advertising agencies. This can lead to increased ad revenue for AOL and to be better able to compete against Google and Facebook.

Tim’s move from Google to AOL two years ago had raised investor hopes that he could help AOL grow and revive businesses. He handled the advertising businesses at Google, a market AOL lacks behind in. After the failure of the 10 year merger with Time Warner, Tim is aiming to revive the company as a to media destinations on the internet.  It is however unclear if Tim is trying to sell AOL to Yahoo or trying to convince shareholders to acquire Yahoo.

Yahoo is currently in the process of seeking strategic alternatives for itself after the recent firing of the company’s Chief Executive Officer, Carol Bartz. Yahoo is looking at potential bidders to acquire the company. Alibaba, Microsoft and a host of private equity firms and others are interested in acquiring Yahoo. Jerry Yang, the founder and chairman of Yahoo is seeking private equity firms to take Yahoo private in order to avoid hostile acquisitions.

Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.