AOL stox up on sale rumors

Stock closed up 6.54% at $14.01

AOL shares soared in a dull market on news that CEO Tim Armstrong has been pushing a sale to online rival Yahoo as the Internet world continues to be buffeted by deal speculation.

AOL surged nearly 7% on hopes that it’s seriously pursuing the combination. It closed up 6.54% at $14.01.

Yahoo stock also rose, firming 1% to $15.93, with separate reports that buyout giants KKR and Blackstone Group are considering a bid. Both shares outperformed the overall market.

Reps for the two companies weren’t immediately available for comment. But it’s par for the course in webland as major players see their stock rise and fall almost daily on merger talk.

Armstrong came to AOL in 2009 from giant Google after a disastrous merger with Time Warner had left the former reeling and successive attempts to reinvent it had fallen short. He has expanded the business and pushed heavily into news. But competition is fierce. Like many Internet CEOs, he’s said to be weighing all options, including a sale or breakup.

Yahoo has also been testing the waters. Possible suitors range from private equity heavyweights to Microsoft to Chinese e-commerce group Alibaba, or some combination. The company dumped its CEO Carol Bartz recently and hasn’t found anyone to take the helm yet. It’s strong in sports and finance and recently inked a deal with ABC News and expanded its original programming.

But life as a standalone is complicated. “It’s hard to create products that customers really like. It’s hard to distinguish yourself,” said one fund manager, discussing AOL.

Fidelity Management and Research, AOL’s second largest shareholder as of June 30, cut its stake in the firm to 3.7% from 10.3%, according to an SEC filing earlier this week.

The fund manager cited Yahoo’s revolving door of executives. “And the stock’s not that cheap. It’s not at $6 — it’s at $16,” he said.

Some Wall Streeters have speculated that Netflix may be on the block after some recent strategic shifts. Netflix Thursday announced a hefty program licensing deal with the CW Network, owned by CBS and Warner Bros. Television.

Want to read more articles like this one? SUBSCRIBE TO VARIETY TODAY.
Post A Comment 0

Leave a Reply

No Comments

Comments are moderated. They may be edited for clarity and reprinting in whole or in part in Variety publications.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

More Digital News from Variety

Loading