Faced with a falling stock price and speculation that the company is a takeover target, AOL has huddled with bankers in recent days to discuss options, including the possibility of taking the company private.
The early stage discussions have focused on a price that might entice AOL’s management to consider such a transaction, said sources familiar with the matter.
While the idea of taking the company private is just one idea under consideration, sources said it would allow struggling AOL to restructure without shareholder scrutiny.
“It doesn’t help to be doing a turnaround in public,” said one source. “They could be more bold and take more risks.”
A report that AOL executives had met with a top M&A lawyer and a banker last week has fueled speculation that the company is headed for the auction block.
In a statement, AOL said there was no deal. “Our strategy at AOL hasn’t changed and we are moving faster than ever on executing against it.”
Private-equity firm KKR has been floated as a prospective partner for AOL, which has shed close to $1 billion in stock value since it was spun out of Time Warner in December 2009.
The stock, which opened at $25.54 on its first day as a stand-alone company, closed at $15.31 and is down 35 percent year-to-date.
A rep for KKR declined comment.
Sources said that AOL CEO Tim Armstrong would like more time to turn around the company. However, investors are losing patience after the company reported disappointing earnings and cut its outlook earlier this month.
Investors have grown more skeptical of Armstrong’s strategy to transform the company into a major Web content company as its traditional dial-up Internet business withers away.
AOL has acquired a slew of Web properties, including the Huffington Post for $315 million this year. Still, AOL has struggled with advertising shortfalls.
Even with HuffPO, AOL doesn’t have enough scale, said Andrew Ettinger, a digital ad buyer with R.J. Palmer.
“AOL is less popular than it used to be,” Ettinger said, adding that clients are looking at social media companies. “The hip, new thing has passed them by, but that doesn’t mean they’re not valuable.”