Time Warner Being Acquired By AOL For About $140 Billion

Time Warner, the world's largest media and entertainment company, is being acquired by America Online for about $140 billion in stock in what would be the biggest U.S. corporate merger ever. The

Monday, January 10th 2000, 12:00 am

By: News On 6

Time Warner, the world's largest media and entertainment company, is being acquired by America Online for about $140 billion in stock in what would be the biggest U.S. corporate merger ever. The deal announced Monday raises the stakes in the consolidation scramble in the media industry.

Time Warner stock soared at the news. The combination would greatly extend the ability of Time Warner to deliver its impressive list of properties ranging from Time, People and Sports Illustrated magazines and Cable News Network to Warner Bros. movies, TV shows and music.

America Online, the largest provider of Internet access, has some 20 million subscribers around the world and would wind up with55 percent of the combined company, which will be called AOL Time Warner Inc. America Online's chairman and chief executive, Steve Case, would be chairman of the merged company. Time Warner's chairman and chief executive, Gerald Levin, would be chief executive.

"This is an historic moment in which new media has truly come of age," Case said in a statement announcing the deal.

The new media giant would have combined annual revenue of more than $30billion. In Instinet trading before the opening of New York Stock Exchange trading this morning, Time Warner's share prices jumped to$92.50 from Friday's close of $64.75. AOL stock was at $72.871/2,down from $73.75.

The biggest U.S. deal ever is the proposed $122 billion acquisition of Sprint by MCI World Com. Worldwide, the biggest pending deal is Vodafone's hostile $150 billion bid for Mannesmann. The AOL-Time Warner transaction, uniting a major media conglomerate and a leading Internet company, likely would have major repercussions for both industries. Many big media companies are struggling to figure out how to harness the power of the Internet, and Internet companies are seeking to put entertainment and other content on their Web sites to attract more customers.

"This is a defining event for Time Warner and America Online as well as a pivotal moment in the unfolding of the Internet age," said Time Warner President Richard Parsons.

The deal is subject to certain conditions, including regulatory approvals and the approval of AOL and Time Warner shareholders. The companies said the merger was expected to be finalized by the end of the year. AOL Time Warner's brands would include AOL, Time, CNN, CompuServe, Warner Bros., Netscape, Sports Illustrated, People, HBO, ICQ, AOL Instant Messenger, AOL Movie Fone, TBS, TNT, Cartoon Network, Digital City, Warner Music Group, Spinner, Winamp, Fortune, AOL.COM, Entertainment Weekly and Looney Tunes.

Ted Turner, vice chairman of Time Warner, has agreed to back the merger, according to the companies. Turner holds approximately 9 percent of Time Warner's outstanding common stock Under the deal, Time Warner shareholders will receive 1.5 shares of AOL Time Warner for each of share of Time Warner stock, and AOL shareholders will receive one share of AOL Time Warner stock for each share of America Online stock.

The merger will be effected on a tax-free basis to shareholders, the companies said. When complete, America Online's shareholders will own approximately 55 percent and Time Warner's shareholders will own approximately 45 percent of the new company. Dulles, Va.-based AOL has a market value of about $164 billion. There are some 20 million AOL members and the company offers services in 15 countries and 7 languages. New York City-based Time Warner's market value is valued at $97billion. Some 1 billion people have access to CNN, 2.2 million to CompuServe, 35 million to HBO and the company relies on 120 million magazine readers.