AOL and Yahoo! in merger talks

AOL and Yahoo! are thought to be in talks about a possible merger following the departure of Yahoo!’s chief executive Carol Bartz last week.

AOL’s chief executive Tim Armstrong has reportedly approached investment bankers from Allen & Co. who are working with Yahoo!, which is thought to be worth just over $17 billion.

AOL is valued at $1.68 billion after losing almost $800 million since it was spun off from Time Warner in 2009.

Last week, Yahoo! announced plans to launch a “comprehensive strategic review” after Bartz failed to grow the dwindling business.

However, reports suggest that it would be a bad move for Yahoo!. TechCrunch’s Erick Schonfeld is thought to have said: “While a combination of AOL and Yahoo is always an option, with the main advantage being that it solves Yahoo’s leadership search problem if Armstrong becomes the CEO, it is not a particularly good option. Two dogs don’t make a right (at least in the eyes of Wall Street).” (AOL bought TechCrunch for $25 million last year).