AOL is considering the option to splitting the company into different parts and merging with Yahoo! These talks are in early stages and AOL has not formally made a proposal to Yahoo! yet.
This option is similar to when AOL had split from Time Warner. Before AOL split from Time Warner, they had separated their dial-up Internet service from their display advertising and content business. Back then Time Warner had considered merging AOL with Yahoo! until the company decided to have them file public again as a separate company.
Yahoo! is expected to make about $1.64 billion in EBITDA this year. Yahoo! claimed that they are not seeking any buyout or proposal discussions with AOL. A big chunk of AOL’s revenues are from their dial-up business which is expected to make $1 billion of revenue this year out of the company’s $2.4 billion. AOL has about 4 million dial-up customers and it is dropping by about 200,000-300,000 per month.