Yahoo And AOL Start Merger Talks

Sites include AOL.com , Yahoo.com . Published on September 14th, 2011. Written by Anthony West.

AOL is struggling as a company; Yahoo is struggling as a company, so it simply makes sense for the two to have a talk. The ‘talking’ that is taking place is apparently merger talks.

According to Bloomberg, the good folks over at AOL have reportedly reached out to Yahoo in an effort to get the two former tech giants to agree to some sort of merger deal. This comes less than a week after Yahoo’s board gave their CEO, Carol Bartz the sack. AOL had made an approach earlier (when Bartz was in good grace) and the offer was rejected, presumably on the grounds that Yahoo could keep itself afloat.

Clearly both companies are struggling, and with Yahoo’s CEO getting the boot, there’s speculation that AOL’s CEO, Tim Armstrong may suffer the same fate. Industry experts think that a merger would help Armstrong keep his job, but that doesn’t seem likely—at least not on the strength of any merger. This is because insiders have revealed that the new merger approach has been rejected flatly by the people at Yahoo. This in many respects is in keeping with their policy of turning down merger approaches; the company turned down a merger approach from Microsoft back in 2008 that gave it a valuation of $44.6 billion.

Experts will mock Yahoo for turning down AOL, but perhaps the tech giant has sound rationale for rejecting the offer. Yahoo has a market value of $18.2 billion while AOL is worth a paltry $1.6 billion—clearly AOL needs Yahoo more. One thing is crystal clear though, one of these companies will die a corporate death. The only question is which one?

Who do you think will go under first, Yahoo or AOL? Let us know your thoughts in the comments below.