AOL, Time Warner Jump After Merrill
Report
By Justin Dini
TheStreet.com/NYTimes.com Staff Reporter
2/23/00 1:22 PM ET
Shares of America Online (AOL:NYSE - news -
boards) and Time Warner (TWX:NYSE - news -
boards) jumped Wednesday following a bullish report by
Henry Blodget, an influential analyst, on the proposed
merger between the two.
Reversing a month-long slide, AOL surged 5 11/16, or
11%, to 55 5/16 in midday trading, while Time Warner
was up 6 15/16, or 9%, to 80 1/2. (AOL finished up 7
3/8, or 15%, at 57, while Time Warner closed up 3, or
4%, at 76 9/16.)
From Jan. 10, the day the $150
billion merger was announced,
until the stock market's close
on Tuesday, AOL's shares lost
23% of their value while Time
Warner dropped 11%.
Blodget, the Internet analyst at Merrill Lynch, in his
first formal report on the deal, called the proposed
merger a "strong, powerful combination."
"If any mega-merger of this size can work, this one
can," Blodget wrote, citing the "sensible" approach
management is taking to the deal as well as operating
synergies between the two, the potential transformation
of existing businesses and the potential for rolling out
new businesses.
Merrill's 12- to 18-month price target for AOL is $90,
while its target for Time Warner is $135. The firm rates
both stocks a buy. A Merrill representative said the
company has not done any underwriting for AOL but did
not know whether the company has worked with Time
Warner.
The AOL-Time Warner merger is expected to be
completed by the end of the year.
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