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AOL is retaining the services of law firm Wachtell, Lipton, Rosen & Katz, as well as investment bank Allen & Co., Ki Mae Heussner at AdWeek reports.Both Wachtell and Allen & Co. are top mergers and acquisitions firms. Wachtell cofounder Martin Lipton and Allen director Nancy Peretsman were at AOL on Wednesday, Heussner reports.
In an email to AdWeek, CEO Tim Armstrong said, “There is no deal on the table, no proposed deal, and both parties are on retainer with us and we work with them. Our strategy hasn’t changed and we are moving faster than ever on it.”
That doesn’t mean that AOL isn’t getting offers, though.
If PE was ever going to take out the company, now’s the time. The company’s stock is trading around historic lows, and it’s looking pretty cheap.
After reading the AdWeek story we reached out to an industry source for his take. He speculated that AOL would only hire lawyers and bankers if it was getting serious offers. Armstrong wants to protect the company from shareholder lawsuits.
Our source thinks that only PE would be interested in AOL, not any media companies.
“They’re pretty dead in the water, there’s no question about it,” said our source, adding that the company is wasting its cash on stock buybacks, so it can’t make another big acquisition. Patch isn’t working. Plus, if it had something bright on the horizon for Q3 or Q4, we probably wouldn’t hear about PE coming after AOL.
Our source’s bleak assessment on AOL: “The motor is sputtering, the rudder is gone, and now sharks are circling.”
Update: It may be bleak for AOL, but investors took this news as a sign to buy the stock. It’s up 10% on the report.