AOL shares fall; report of possible Yahoo tie-up

The AOL logo is seen on the outside of the building housing the companies corporate headquarters in New York May 28, 2009.

NEW YORK (Reuters) - Investors sent shares of AOL down over 5 percent on Friday after conflicting reports about a possible tie-up between AOL and Yahoo.

AOL Chief Executive Tim Armstrong reportedly approached private equity firms to gauge interest in a deal with Yahoo that would place Armstrong as the head of the combined company, according to a Bloomberg report.

CNBC later reported that a source close to Yahoo said the company had no interest in a deal with AOL.

AOL shares closed down 5.3 percent at $14.72 while Yahoo inched up 0.3 pct to $14.48.

Both Yahoo and AOL declined to comment.

Benchmark analyst Clay Moran said that AOL investors were likely disappointed that Yahoo was not interested in a deal.

This is not the first time that reports of an AOL-Yahoo tie-up have surfaced. Last year, AOL, once famed for its dial up and email services, tapped Bank of America to explore strategic options, including a potential merger with Yahoo, people familiar with the matter told Reuters at the time.

Yahoo has been embroiled in its own troubles, causing the ousting of its Chief Executive Carol Bartz earlier this week.

(Reporting by Jennifer Saba and Alexei Oreskovic; Editing by Tim Dobbyn)