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Technology Stocks : America On-Line (AOL) -- Ignore unavailable to you. Want to Upgrade?

To: RocketMan who wrote (36759)	1/10/2000 7:58:00 AM
From: yellowfintuna	Read Replies (2) \| Respond to of 41369

Time Warner, AOL to Merge; Deal Creates a Multimedia Giant By PETER GUMBEL Staff Reporter of THE WALL STREET JOURNAL LOS ANGELES -- Media and entertainment giant Time Warner Inc. and the world's biggest online-service provider America Online Inc. announced a blockbuster merger early Monday valued at $350 billion. The two firms said the merged entity will be renamed AOL Time Warner Inc. Under terms of the deal, Time Warner shareholders will receive 1.5 shares of AOL Time Warner for each share they own. AOL shareholders will receive one share of the new entity for each share they own. When complete, America Online's shareholders will own approximately 55% of the combined firm and Time Warner's shareholders will own approximately 45%. The stock will be traded under the symbol AOL on the New York Stock Exchange, the companies said. Based on AOL's composite closing price of $73.75 on the New York Stock Exchange Friday, and based on the terms of the merger, the all-stock combination is valued at $350 billion. America Online Chairman and Chief Executive, Steve Case, will be named chairman of the merged company, while Time Warner's Chairman and Chief Executive Gerald Levin will be chief executive. Ted Turner, currently vice chairman of Time Warner, will continue in that capacity at the merged firm. The companies said Mr. Turner has agreed to vote his Time Warner shares, representing approximately 9% of the company's outstanding common stock, in favor of the merger. AOL, which has more than 19 million subscribers, has a current market capitalization of about $164 billion, while Time Warner has a market capitalization of $83 billion. By uniting a major media conglomerate with a leading Internet company, the transaction is likely to have major repercussions on both industries. It comes at a time when many big media companies are struggling to figure out how to harness the power of the Internet, and when Internet companies are increasingly looking to put entertainment and other content on their Web sites to attract more customers. Meanwhile, Time Warner has been trying to build Internet "hubs" that focus on entertainment and news and created a high-speed Internet service called Road Runner. AOL has been sparring recently with Time Warner over the issue of cable-TV companies allowing access to their high-speed lines into consumers' homes to Internet service providers. Time Warner's businesses include Time magazine, Warner Bros. studio, Warner Music Group, the HBO cable channel, Time Warner Cable, Time Warner Telecom, Warner Books and the WB television network. Time Warner's businesses include Time magazine, Warner Bros. studio, Warner Music Group, the HBO cable channel, Time Warner Cable, Time Warner Telecom, Warner Books and the WB television network. Active Dealmakers Both companies also have been busy with various deals recently. Time Warner reportedly is interested in buying General Electric Corp.'s NBC television network for $25 billion. General Electric and Time Warner denied they have talked. Last month in its latest move to expand investments in new media, Time Warner said it established a $500 million fund for digital-media investments, with half of the fund made up of cash and the other half in promotional time on Time Warner's media outlets. The fund will focus Time Warner's investment efforts through the Time Warner Digital Media unit established last year. Late last year, AOL agreed to acquire digital-map company MapQuest.com Inc. for about $1.1 billion in stock. AOL executives said the Mapquest.com acquisition will bolster its efforts to provide information access from cellular phones, handheld computers and a variety of emerging personal devices. AOL, meanwhile, has undertaken a broad campaign dubbed "AOL Anywhere" to extend elements of its flagship service beyond the confines of personal computers. MapQuest will fit neatly into this strategy, since it has partnerships with Nokia Corp. and Sprint Corp. to deliver travel directions to users of Internet-enabled phones. MapQuest is also developing a service that uses telephones to verbally dictate-driving instructions to users. Now AOL will be part of those ventures. Marketing Alliances to Be Expanded Separate from the merger transaction, America Online and Time Warner also announced new marketing, commerce, content and promotional agreements that will immediately expand various relationships already in place between the two companies. Some of the agreements include: The AOL service will feature Time Warner's InStyle magazine, expanding on the content Time Warner already offers AOL members from other magazines. CNN.com and Entertaindom.com programming will be featured prominently on various America Online services. AOL members will have access to a wide range of Time Warner promotional music clips from Time Warner artists. Time Warner and AOL MovieFone will participate in online-offline cross-promotion of Time Warner movies and related content, including live events. Broadband CNN news content will be distributed on AOL Plus, the rich media content offering designed for AOL members connecting via broadband, when it launches this spring.

To: RocketMan who wrote (36759)	1/10/2000 9:04:00 AM
From: David E. Taylor	Read Replies (1) \| Respond to of 41369

The chatter on CNBC this morning was that this deal was in the works as early as late November/early December but that AOL's high stock price (then 85 -95 top) was the stumbling block, presumably because at the higher AOL price, the deal would have been more weighted in AOL's favor, i.e. TWX shareholders would have gotten less shares in the combined company and TWX shareholders less. So, now AOL gets to become the media giant it wanted to be. But what's the valuation of the combined entity? Will it trade as a media company with a healthy but much lower P/E, as an internet company with a huge P/E, or somewhere in between? My own take is that we can forget AOL at 140-150 by year end, and that the valuation of the combined companies will be somewhat higher than TWX's historical P/E valuation, but quite a bit less than the prior expectations for AOL. So I'd be surprised if we get back to 95 on AOL any time soon. Guess I'll wait to see how the dust settles before I decide on whether to reduce my currently high weighting in AOL. David T.