AOL may explore merger with Yahoo

AOL is believed to be actively exploring a break-up of the company in a complicated series of transactions that may lead to a merger with rival internet giant Yahoo.

Citing sources close to the plan, Reuters yesterday said that AOL has not yet made a formal proposal to Yahoo, but the latest talks derive from plans to break up and sell AOL, which were considered before Time Warner spun off AOL in 2009.

AOL and Yahoo declined to comment. A source close to Yahoo said it was not in any talks with AOL.

The plans come amid a painful turnaround strategy led by AOL chief executive Tim Armstrong, who has sold assets such as the social networking website Bebo.