Anyone got any good analysis of the AOL deal.........
AOL-Time Warner Deal Shakes Up The Industry
America Online, the leading Internet service provider, and media and entertainment company Time Warner Inc. today announced the first megamerger of the new millennium. The deal, worth $180 million in stock and debt, would be the biggest merger ever.
The new company, to be called AOL Time Warner Inc., will deliver branded information, entertainment, and communications services across rapidly converging media platforms.
"This really completes the digital transformation of Time Warner," Gerald M. Levin, Time Warner's chairman, said at a press conference early today. "These two companies are a natural fit."
The merger fills holes in both companies' portfolios. It provides Time Warner, the largest provider of movies, music, and magazines, access to AOL's 20 million online subscribers. For AOL the benefit lies in Time Warner's large cable network. With 13 million subscribers, this network is second only to AT&T's cable subscription base and will provide AOL a broadband network over which to deliver its services.
Founded in 1985, AOL has nearly four times the net profit of Time Warner, earning $762 million in the fiscal year that ended June 30. Time Warner, which was created in 1990 by the merger of Warner Communications and Time Inc., far surpasses AOL in revenue, bringing in $26 billion compared with AOL's $4.8 billion.
The combined company has a market capitalization of $350 billion with an annual revenue stream expected to top off at $30 billion. "This is an historic moment in which new media has truly come of age," said Steve Case, chairman and CEO of America Online.
The deal, agreed to by both companies' boards of directors, will give AOL shareholders 55% of the new company, while Time Warner shareholders will own the remaining 45%. Time Warner shareholders will receive 1.5 shares of AOL Time Warner stock for every share they now own, and AOL holders will get one share of AOL Time Warner stock.
The news drove Time Warner's stock up 25-5/16 to close at 90-1/16. AOL fell 1-13/16 to 71-15/16. This all-stock transaction will surpass the proposed $142.2 billion purchase of Mannesmann AG by Vodafone AirTouch plc, making Ted Turner, Time Warner's largest shareholder with 9% of the stock, $3 billion richer on paper.
Case from AOL will be chairman of the merged company, while Time Warner's Levin will be CEO.
The deal is subject to certain conditions, including regulatory approvals and the approval of AOL and Time Warner shareholders. The companies said the merger is expected to be finalized by the end of the year.
-- Marguerite Reardon |
