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AOL's Steve Case Sees Merger with Time Warner as a Game of Waiting

Strategic Insights

— 1 min read

Steve Case, co-founder, chairman, and CEO of America Online, is waiting along with George W. Bush for the resolution of the company's bid to merge with Time Warner. However, unlike the Republican presidential candidate, Case's wait will be less grueling due to the nature of the deal. The proposed merger is an all-stock transaction, which means that the outcome is dependent on various market forces, including the performance of both companies' stocks.

Key Takeaways:

  • The merger between AOL and Time Warner is an all-stock deal, which is contingent on various market factors, including the performance of both companies' stocks.
  • The deal's outcome is uncertain due to the fluctuating stock prices of AOL and Time Warner, with AOL's stock price having plummeted 54.6% since the announcement and Time Warner's stock price decreasing by 37.4%.
  • Despite the uncertainty surrounding the deal's value, Case remains optimistic about the potential for a successful merger, citing the "embarrassment of riches" of combined talent and diverse media assets.
  • The merged entity will have multiple sustainable options in a rapidly changing media landscape, giving it a competitive edge.
  • The experience of mergers at DaimlerChrysler and AT&T, which both saw their stock prices plummet post-merger, serves as a cautionary tale for investors.
  • The New York Times' post-mortem article on December 4 highlights the challenges and pitfalls of large-scale mergers.

Statistics:

  • AOL's stock price has declined by 54.6% since the merger announcement.
  • Time Warner's stock price has decreased by 37.4% since the announcement.
  • The merged entity will have a diverse portfolio of media assets, including TV, movies, magazines, and internet services.
  • The total value of the deal is uncertain due to the fluctuating stock prices of both companies.

Sources:

  • "AOL's Steve Case Sees Merger with Time Warner as a Game of Waiting" - original text
  • UBS Warburg Media Conference - source of Case's quote
  • The New York Times' article - "Post-Mortem on Mergers" (December 4) - reference to DaimlerChrysler and AT&T's experiences.

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