RSSIcahn Warns Against AOL-Google Deal
By Ed Oswald | Published December 19, 2005, 4:00 PM
Billionaire investor Carl Icahn inserted his two cents into the rumored exclusive negotiations between AOL and Google. Icahn warned that if the deal with the search engine would prevent a merger or deal with another online company, the board could be "on the verge of making a disastrous decision."
Icahn has already called for a shareholder vote to replace the Time Warner board, saying the company needs to streamline its business and begin setting up sales of assets that were holding the company's stock price down.
The hedge-fund investor holds a 3.1 percent stake in the media conglomerate, according to recent financial filings.
To back up his argument, Icahn cited a Goldman Sachs report that said Google was not the best partner for AOL financially, and that eBay or InterActive Corp. would provide better value. But the firm also said that a MSN deal would not provide much of an advantage over a partnership with Google.
"On the eve of a proxy contest, I believe it would be a blatant breach of fiduciary duty to enter into an agreement with Google that would either foreclose the possibility of entering into a transaction that would be more beneficial for Time Warner shareholders or make such a transaction more difficult to achieve," Icahn wrote.
Icahn said that if the rumors were true that Time Warner had only accepted bids from those looking to take a financial interest in the company, its actions would be "even more questionable." Time Warner would be taking too great a risk, Icahn says, and and an exclusive deal could prevent the company from maximizing AOL's value.
There is not an opposition to a partnership, Icahn added, only to one that takes away AOL's flexibility to work with other Internet companies. "I want this letter to serve as notice to Time Warner's directors that if they enter into a transaction that has that effect, shareholders will seek to hold directors responsible," he said.
The board of Time Warner is expected to meet on Wednesday, and an announcement on a possible Google-AOL deal has been rumored to come as early as Thursday.
I think that there is a moral for this 5%. Google is a great company and i think that is the right decision
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|Well it already happened. Google does own 5% of AOL now. Just a lil inside info.
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|Personally if this deal is true(which I hope it is not), it will be bad for AOL. Personally a deal with MSFT would have been more benifically to the consumer
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|MSFT could also be a bad choice for AOL as well though. As Apple grows stronger there could be a day MSFT feels threatened by them. Which would cut off all support for AOL on Apple, and many Apple users are infact very fond AOL that have limited computer knowledge. As operating systems get easier and easier to just plug a router in with broadband and get goin, and more portals offering what AOL has for free. I only see AOL losing customers unless they make some new innovative changes. This is just my personal preference, but AOL and AIM are some of the biggest causes of all our clients problems.
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|The only 2 things a wish I say with a MSFT and AOL talk would have been intergration with AIM and msnsearch/AOL
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