AOL Reportedly in Talks With Yahoo Advisers Following Carol Bartz Exit

Jeff Lipsky

CEO Tim Armstrong is discussing the possibility of combining the two Internet based companies.

Days after former Yahoo CEO Carol Bartz was publicly ousted, AOL is reportedly in talks to join forces with the most-visited U.S. Web portal.

STORY: Yahoo CEO Carol Bartz Out; Replaced by CFO Tim Morse

AOL CEO Tim Armstrong is said to be discussing options for potentially combining the two Internet companies, Bloomberg reports. According to insiders who declined to be identified, Armstrong has spoken with private equity firms and investment bankers from Allen & Co. working with Yahoo.

Bloomberg notes that Yahoo is unlikely to be interested in a merger at this time, as AOL's market value is approximately $1.6 billion, while Yahoo's is around $18.2 billion. Spokespersons from both companies declined to comment.

STORY: Carol Bartz Slams Yahoo's Board: 'These People F---ed Me Over'

Former Yahoo CEO Bartz was removed from her post on Tuesday, Sept. 6 and replaced on an interim basis by CFO Tim Morse. Reportedly, Bartz had shot down talks of an AOL Merger just last year. Sources said that her sudden departure has prompted Armstrong to pursue the option once again.

Yahoo was founded in 1994 by Yang and David Filo and was one of the frothiest stocks during the Internet bubble that burst about seven years later.

STORY: TechCrunch Founder's Demotion Sparks Internal Conflict at AOL

Just before the bubble popped, Yahoo shares were so valuable that analysts and investors were encouraging the company to use them to purchase Disney. On Tuesday, though, Disney’s market capitalization of $60 billion dwarfed Yahoo’s $16 billion valuation.