Yahoo! Inc. (NASDAQ:YHOO) – AOL, Inc. (NYSE:AOL) Merger Deal Gaining Momentum

Posted by Kristi Scott December 18, 2014 0 Comment 1196 views

A proposed merger between Yahoo! Inc. (NASDAQ:YHOO) and AOL, Inc. (NYSE:AOL) is a debate that refuses to go away seen as a breakthrough that could give yahoo a lifeline having been struggling to impress investors in the recent past. An excerpt from the Business insider indicates that AOL CEO, Tim Armstrong, may be up for the idea having vehemently opposed the same a few months back.

Shareholders Pressure

According to CNBC number of shareholders remain supportive of the merger as it will result in a combined entity that is 70 to 80% more valuable than when operating as independent entities. A potential agreement will only happen if Yahoo! Inc. (NASDAQ:YHOO) CEO, Marissa Mayer and Armstrong are to come to an agreement seen as a possible lifeline to both companies going forward.

Reports indicate that Armstrong has already seen the excerpt on the valuation of the two combined entities and may be willing to consider a deal.  A merger with AOL, Inc. (NYSE:AOL) is being pushed by Yahoo! Inc. (NASDAQ:YHOO) major shareholders who believe that Marissa Mayer remains incapable of turning around the fortunes of the company that continues to struggle amidst increased competition in the space.

Acquisitions Spree

A wave of acquisitions by Mayer that was thought could give the company a lifeline has only gone to add expenses without any substantial returns that can excite investors.  It is believed that a number of employees, advertisers and shareholders have become extremely frustrated on Mayer’s turnaround plan that has failed to spark any momentum.  Yahoo! Inc. (NASDAQ:YHOO) remains highly valued based on its remaining stakes in Alibaba. Mayer’s plan to position Yahoo in the ranks of other App producing companies has also failed to bear any fruits.

Startups such as Tumblr that was acquired in 2013 for $1.1 billion have failed to revive the company’s revenue that has stagnated at the $5 billion mark. Yahoo! Inc. (NASDAQ:YHOO)’s only way out of the current woes would be focusing on the ad business that Google Inc. (NASDAQ:GOOGL) and Facebook Inc. (NASDAQ:FB) seems to be running away with each passing day. A partnership with AOL, Inc. (NYSE:AOL) in this case will help bolster the search engine’s prospects in this space as one of the ways of fending-off competition.

Mayer’s sinking ship

Mayer has already resorted to meeting the company’s shareholders in the wake of activist investor starboard reiterating desire to have the search engine merge with AOL, Inc. (NYSE:AOL). Mayer has always reiterated that her way is the right one for Yahoo! Inc. (NASDAQ:YHOO) as she continues to push for tax efficient divestitures for the company’s stakes in Alibaba Group Holdings Ltd (NYSE:BABA).

About Kristi Scott

Kristi Scott joined GDP Insider in 2005 as a Wall Street reporter for the Business and Market section. Kristi covers the stock market, financial markets and personal finance. Her awards have come from the National Federation of Professional Writers, the Ohio Newspaper Association, the Cleveland Press Club, the Society of Professional Journalists and Suburban Newspapers of America. Kristi was named SNA's national Journalist of the Year

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