AOL buys out Time Warner for $160b

BANGALORE: America Online (AOL) announced on Monday that it was buying media and entertainment major, Time Warner, for about $160 billion, the biggest corporate acquisition ever. The new firm will have an estimated combined value of $350 billion. 

"This really completes the digital transformation of Time Warner," chairman Gerald Levin told analysts. The merger would give Time Warner - the provider of media content such as movies, music and magazines - a powerful platform for reaching people online. AOL is the largest US online company with some 20 million subscribers. 

The deal also gives AOL a key tool for distributing its services through Time Warner's Large Cable Network System, the nation's second largest after AT-and-T's with 13 million cable subscribers. Time Warner's large list of media properties includes CNN, HBO, Time, People and sports illustrated magazines, and the Warner Bros, movie, TV and music properties. 

The deal values Time Warner at about $110 a share, a premium of 71 per cent over its price of $64.75 a share late Friday. Time Warner shares jumped by 46 per cent on the New York Stock Exchange (NYSE) on Monday morning. AOL shares rose to $74.93 on the NYSE. 

AOL shareholders would own 55 per cent of the combined company, which will be called AOL Time Warner Inc. Time Warner shareholders will own the rest. AOL and Time Warner would each name half of the board of directors of the new company. AOL chairman and chief executive Steve Case was named chairman of the merged company, while Levin, will be the chief executive, the companies said in a statement.