Reuters has learned some top Yahoo shareholders want AOL CEO Tim Armstrong to consider a merger and run the combined company. Fred Katayama reports.
Some Yahoo shareholders are so unhappy with CEO Marissa Mayer they've sent an SOS to her rival, AOL CEO Tim Armstrong. Reuters has learned they want Armstrong to consider a merger and run the combined company. At least two top Yahoo shareholders say Armstrong has been receptive and saw the potential merits of a merger. But sources close to AOL say he would only consider a friendly deal. They figure a combined company could yield as much as $1.5 billion in savings. All this started after a former activist investor in AOL, Starboard Value, bought a stake in Yahoo in September. It urged Mayer to consider marrying AOL. Alibaba and Yahoo Japan make up the majority of Yahoo's valuation. So Starboard wants Yahoo to monetize those holdings by spinning off its Web and email business. Pivotal Research senior analyst Brian Wieser said the combined company would probably be better off under Armstrong, "AOL ... has generally made the right calls, strategically, especially when compared with Yahoo.. If investors were presented with the option to support such a transaction, they probably would." Armstrong is credited with putting new life into a dying brand and doubling AOL's valuation. Some Yahoo investors want Mayer to pull back from her buying spree. Too late: Yahoo just bought the video ad service, Brightroll for $640 million. That happens to be a rival of the platform Armstrong bought, Adap.TV. Yahoo shares, up 21 percent this year, added to those gains in early trading. Analysts think Brightroll was a bright move. CRT analyst Neil Doshi said, "... the deal should help Yahoo's efforts in two key sectors ... where we believe the company is currently playing catch-up: online video advertising and programmatic advertising."