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AOL, Yahoo in merger talks?

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Yahoo!
Struggling internet giants AOL and Yahoo are reportedly in talks over a merger as they seek to regain market share from Google, Facebook and others.

AOL's chief executive Tim Armstrong has approached investment bankers Allen & Co, who are representing Yahoo, to explore possible options for combining the companies, according to Bloomberg.

Search engine firm Yahoo has announced plans to conduct a "comprehensive strategic review" of its business following the decision to fire Carol Bartz.

Bartz was hired to turn the company around, but despite cutting costs and staff numbers, she could not generate growth quickly enough in Yahoo's struggling operation.

Armstrong is thought to have worked with several private equity firms last year to make an approach for Yahoo, but it was rebuffed by Bartz.

Yahoo was worth nearly $80 billion (£50bn) in its heyday and the firm rejected a $47.5bn offer in 2008 from Microsoft. However, it is now worth only around $17bn after being outpaced by Google and Facebook.

AOL is valued at $1.68bn after losing nearly $800m since it was spun off from Time Warner in 2009, but Armstrong has tried to revamp the firm by acquiring content companies, such as news site Huffington Post.

Despite their continued struggles, AOL and Yahoo remain major players online and any proposed merger is likely to trigger significant regulatory scrutiny.

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