What did Marissa Mayer ask AOL's CEO over late night drinks?

Yahoo CEO Marissa Mayer certainly knows how to make meetings memorable.

After managing to avoid a shot by a single photographer all week at the Allen & Co. conference in Sun Valley, Idaho, Mayer was spotted inside the Duchin bar at around 11:30 p.m. Thursday. Perhaps more surprising than the sight of Mayer was her drinking buddy: none other than AOL CEO Tim Armstrong.

The two executives, whose companies have long been rumored as merger partners, shared a table close to the entrance of the bar sipping drinks for over an hour. Also in the house was a mix of big hitters including New Jersey Gov. Chris Christie, Google co-founder Larry Page, Twitter CEO Dick Costolo, and venture capitalist Ben Horowitz. Press and even staff of Allen & Co. are banned from entering the wood-paneled bar, which is nestled below rugged mountains.

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Marissa Mayer and Tim Armstrong.
Getty Images

The two nearly closed down the bar when they emerged into the lobby well after midnight. Mayer, dressed smartly in all blue, laughed amiably when a group of reporters asked her to join a game of poker. Armstrong, who wore a dress shirt with jeans, also declined with a smile and made a quick exit. Neither revealed a word about the subject of their chat.

The Sun Valley conference, which was first held in 1983, has long been known as a dealmaking hotbed for elite media and technology companies. Two decades ago, Ted Turner came up with the idea of buying New Line Cinema in Sun Valley. In 1995, Walt Disney's Michael Eisner met with Tom Murphy of Capital Cities/ABC, which was swallowed up by the mouse shortly after. Most recent was Amazon founder Jeff Bezos, who met with Donald Graham in 2013 before buying The Washington Post from him the next month.

What can spur growth for Yahoo?
What can spur growth for Yahoo?

Why would Yahoo and AOL tie up? For one, Yahoo is about to come into a pile of cash when e-commerce giant Alibaba likely goes public in a few weeks. Yahoo has agreed to sell shares worth about 9 percent of Alibaba. With expectations for Alibaba to be worth $150 billion or more, Yahoo will have more than enough cash to buy AOL, which has a market capitalization of $3.2 billion.

There's also some strategic rationale. AOL may not have cracked the code in advertising, but it has come close. The company's advertising revenue soared 17 percent last year and analysts expect another healthy gain of 11 percent this year. Yahoo, however, is still trying to find its way on that front. Analysts expect Yahoo's search and display revenue to grow at a low-to-mid single-digit pace over the next few years, according to FactSet. Mayer has even been punished by some observers for the seemingly minor mistake of oversleeping for a recent meeting with advertisers several weeks ago in Cannes, France.

Unfortunately, Thursday night offered few clues on any deal talks between AOL and Yahoo. As for the last CEO to leave the bar, it was Drew Houston, founder of successful backup and storage company Dropbox.

—By CNBC's John Jannarone.