A plugged-in source tells us that private equity firms are calling AOL CEO Tim Armstrong and asking him if he would like to lead a company made up of the merged assets of AOL and Yahoo.
According to this source, one option the PE firms have brought up is taking the merged company private. This source said Tim is “definitely” interested in combining the companies.
This jibes with what we heard from another source close to Tim over the summer: that he wishes he’d gotten the Yahoo CEO job instead of the AOL one a couple years back. Also: of course Tim would be interested in a positive outcome for AOL.
We think an AOL-Yahoo merger makes sense for cost-cutting reasons, but we’re sceptical Yahoo will go private to get it done.
As an industry source explained: “PE firms really don’t like to go hostile, and there is no way the board of a $20 billion market cap company buys a $2 billion market cap company shrinking at 20% a year and puts its CEO, who has exactly one year of experience running a company, on top of both.”
“This would be a VERY big deal for PE, so it would likely be a club deal with a bunch of both industry and PE firms involved, which makes it all the more complicated to pull off.”