AOL boss still hopeful of a Yahoo merger

Steve Dinneen
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AOL boss Tim Armstrong (pictured) has held meetings with shareholders over the potential benefits of a merger with struggling internet giant Yahoo.

Armstrong is keen to keep the potential deal on the table despite Yahoo appearing to cool on it. Supporters of the merger say it could wring out up to $1.5bn (£960m) in savings.

Both former giants of the dotcom era are battling to maintain their relevance in a market dominated by the likes of Google and Facebook.

AOL has seen its share price more than halve since it was spun off, in 2009, from its disastrous partnership with Time Warner.

Yahoo has also plummeted from a share price high of over $100 to just $15 – far below the $31 offered by Microsoft in 2008.

But analysts are now questioning whether two wrongs can make a right. Ian Maude, of Enders analysis, told City A.M. a merger could give them more leverage in the advertising market and synergies in their technology businesses but said it is no silver bullet for their problems.

He said: “It doesn’t change the dynamics of either business – it doesn’t turn them into a Google. But with Microsoft being linked with Yahoo again – albeit at a far lower price than last time – AOL could feel like it will be left out in the cold. If it can engineer a tie-up with Yahoo, Microsoft could conceivably end up owning them both.”