AOL 'discusses deal' with Yahoo after Bartz exit

NEW YORK - AOL Inc Chief Executive Officer Tim Armstrong is talking with advisers of Yahoo Inc to gauge its interest in combining the companies after the ouster of CEO Carol Bartz, according to two people familiar with the matter.

Armstrong is discussing options for a combination aimed at strengthening the two Internet companies, said the people, who did not wish to be identified. He has talked with private equity firms and investment bankers from Allen & Co working with Yahoo, one person said.

Armstrong had been interested in a merger with Yahoo last year and was rebuffed while Bartz was at the helm, one person said. Her departure prompted him to revisit the idea, and, under one scenario now being considered, Yahoo would acquire AOL and Armstrong would become CEO of the combined company, the person said.