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August 25, 2011 5:25 PM

Report: Wachtell Advising AOL, Though CEO Says No Deal in the Works

Posted by Brian Baxter

Wachtell, Lipton, Rosen & Katz founding partner and M&A maestro Martin Lipton met with top AOL executives on Wednesday, according to Adweek.

The trade publication reports that AOL has retained both Wachtell and investment bank Allen & Company, in what could be the prelude to a "high-level transaction." But AOL CEO Tim Armstrong told Adweek that the presence of the 80-year-old Lipton in the company's New York offices does not signal that a deal is imminent.

"There is no deal on the table, no proposed deal, and both parties are on retainer with us and we work with them," said Armstrong, a former top Google executive profiled in The New Yorker earlier this year. According to a proxy statement filed this year by AOL, Armstrong owns 2.7 percent of the company. "Our strategy hasn't changed and we are moving faster than ever on it."

Business Insider reported Thursday that AOL's sagging stock price—currently at its lowest price since the company split with Time Warner—could make it an attractive takeover target for private equity firms

Wachtell's Lipton, of course, is the inventor of the so-called poison pill defense against hostile corporate takeovers. His firm recently advised clients Clorox and Kodak as they adopted shareholder rights plans to fend off unwanted acquirers.

When it comes to corporate work, AOL has traditionally turned to Simpson Thacher & Bartlett. The firm advised the company earlier this year on its $315 million acquisition of The Huffington Post. Simpson also handled AOL's purchase last year of Web video syndication company 5min Media.

And it was was Simpson that AOL turned to for its mammoth $182 billion stock-and-debt merger with Time Warner in 2000. The ill-conceived deal, which was unwound in May 2009, netted Cravath, Swaine & Moore a $35 million all-inclusive contingency fee for its M&A work on behalf of Time Warner.

AOL's general counsel is Julie Jacobs, who ascended to the position a year ago after taking over from predecessor Ira Parker. Jacobs did not immediately respond to a request for comment on how long AOL has had Wachtell on retainer. AOL's shares rose in trading on Thursday after news broke about the company's hiring of M&A advisers.

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