What do you get when you combine two once-hot Internet superpowers? If AOL CEO Tim Armstrong gets his way, we could find out soon enough. Reuters is reporting that Armstrong has been trying to talk AOL shareholders into a sale to Yahoo, claiming that it would save the company more than a billion dollars and boost ad sales.
According to a major investor who attended the meetings, Armstrong is trying to sell shareholders on the notion that an AOL-Yahoo merger could create $1 billion to $1.5 billion in savings by getting rid of the companies’ overlapping data centers and news sites. Armstrong is also asserting that the combined sites would attract advertisers who are looking for a bigger audience, sources said.
“The focus in the meeting has gone from a year ago of being around the fundamentals to now being how could you carve this up, what are separate assets worth, are there ways to sell off the business to extract value from them,” a second investor told Reuters.
Both shareholders who spoke with Reuters seemed receptive to the idea of a merger, but it might not be easy for Armstrong to pull off. Last month, after Bloomberg first reported that the AOL CEO was in talks with Yahoo’s advisors to gauge their interest in a deal, a “source close to Yahoo” told CNBC that the company wasn’t biting. And less than two weeks ago, Armstrong himself said that AOL is planning to remain a “standalone company.”