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Yahoo! Inc. (YHOO) Could Have A Ruby In Its Hat With Tim Armstrong’s AOL, Inc. (AOL)

Yahoo! Inc. (NASDAQ:YHOO) has been on the lookout for a merger that will pull it out from its growth troubles, and as proposed by Starboard Value, AOL, Inc. (NYSE:AOL) might have just the right gravitational pull that Yahoo is seeking. Tim Armstrong, AOL, Inc. (NYSE:AOL)’s CEO and the biggest shareholder of the company discussed Starboard’s pressure on Yahoo! Inc. (NASDAQ:YHOO) to merge with his company, on CNBC.

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While Armstrong hesitated to discuss the details of a possible deal between the two companies as it involved other parties as well, he did highlight the strengths of AOL, Inc. (NYSE:AOL) in the interned based tech industry.

“[…] You know I think the interesting thing in the industry right now overall is that you have giant dynamics happening and scale matter a lot. That part of the reason we at AOL, Inc. (NYSE:AOL) went to number four in terms of traffic in US this year, pumped up a spot, we have done really well in news, we are number 1 in global news, top three in video, top three in programmatics […],” said Armstrong.

Yahoo! Inc. (NASDAQ:YHOO) will be more than lucky to have AOL, Inc. (NYSE:AOL) in its portfolio, the presence of which could be likened to a precious ruby as it will help to bring down substantial costs for both the companies through synergies. However, AOL, Inc. (NYSE:AOL) might not be too happy to be in that hat, or any hat for that matter. Furthermore, the company could be looking to add a less precious jewel in the form of Yahoo! Inc. (NASDAQ:YHOO) to its own hat.

At this point it’s mostly speculations that revolve around this merger issue, but what is clear is that although the deal will be beneficial for both companies, it will not be easy to get one company to cave in to the other’s pressure and have a subordinate role. Yahoo! Inc. (NASDAQ:YHOO)’s CEO Marissa Mayer is a strong minded women and doesn’t cave in to pressure easily as highlighted by the Dan Loeb episode last year.

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