Is AOL Boss Pitching Merger With Yahoo, Or Is He Pitching Himself?

AOL CEO Tim Armstrong is doing some behind-the-scenes pitching to major shareholders about a plan to have Yahoo acquire AOL, Reuters reported today. That he’s seeking a merger deal isn’t new, but the details are interesting: citing sources, he says such a move would save AOL $1 billion-$1.5 billion when redundancies are eliminated post-merger, and that one large entity would provide a more efficient buy for ad agencies. Those ads have been a problem for AOL, which reported weak sales during its last quarterly earnings, and its stock has suffered as a result — it’s down about 40% since it was mercifully spun off from its ill-fated merger with Time Warner. The latest report suggests Armstrong might use such a merger as a way to bow out gracefully from a company he took over in 2009 after departing from Google. Another consideration, however, is that he might want to have a crack at running Yahoo, which is seeking a new chief after ousting CEO Carol Bartz last month. In effect, Armstrong would trade AOL for Yahoo-AOL. “As far as Armstrong’s desire for an exit, he doesn’t want to be doing what he is doing 18 months from now. He wants to be out,” a source familiar with Armstrong’s thinking told Reuters. “He’s an ambitious sort of guy and AOL is such an afterthought. But he would definitely put his hat in the ring to run a combined Yahoo/AOL.”