AOL dusts off merger plans with Yahoo

AOL chief executive officer Tim Armstrong has admitted that he has been wining and dining Yahoo  again to see if the outfit is interested in a merger.

According to AP, Armstrong is saying this after the ousting of CEO Carol Bartz, which suggests that it might have been something she would not have liked.

Armstrong said that he has been talking with private equity firms and investment bankers from Allen & Co working with Yahoo. Although given the speed of the announcement it does suggest that some talks were advanced even before Bartz’s exit. It is not clear if she knew or not.

Armstrong tried a merger with Yahoo last year and Bartz told him to go forth and multiply. He is now claiming that her departure prompted him to reconsider the option.

The plan is that Yahoo would acquire AOL and Armstrong would become CEO of the combined company.

Reuters says analysts think a deal between the two industry also-rans is daft. AOL and Yahoo are struggling to compete against internet companies such as Microsoft, Google and Facebook.

AOL has lost almost $800 million since it was spun off from Time Warner in 2009.

But both companies are working with Allen & Co to sort themselves out. It is possible that the accountants at the investment bankers saw the opportunity to marry off two of their troubled clients.