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NEW YORK -(Dow Jones)- [money.iwon.com] In an open letter to the Time Warner Inc. (TWX) (TWX) board, investor Carl Icahn questioned the company's agreement to sell 5% of its AOL Internet unit to Google Inc. (GOOG) (GOOG), warning that the move may be "short sighted" and a "blatant breach of fiduciary duty."
In a press release Monday, Icahn, the founder of equity group Icahn Partners LP and known as an activist investor, said, "I...question whether Google is the best partner for unlocking the value of the AOL asset."
First, Icahn warns the Time Warner board that he will hold them financially responsible if they sell for any less. This, coming when google was rumored to have pulled out of the deal.
Now that google is back in the works, Icahn is working the other side of the fence.
Dissident shareholder Carl Icahn aims to block an alliance by Time Warner Inc.'s America Online unit and Web search leader Google Inc. saying the pact could undermine a potential merger between AOL and a Google rival, the billionaire investor said on Monday.
Heh, is he a stakeholder in MS? Perhaps this is Ballmer's chair.
sometimes you pay more not to have your competition get it. Imagine the press if MSFT had won this. Google's stock would have taken a huge drop and maybe started a downward trend. Instead, now their stock is way up, and they'll give AOL $1 Billion in stock, which they can sell the next day or so. Just as good as cash.
$1 Billion is not much to AOL-TW, at least not enough to want it that bad. Now selling ads on Google while keeping 80% of the profit, advertising their content, and still getting a $1 billion is totally different.
The 2-3% that Icahn has might not be enough, but we'll see.
What Icahn wants is to take over a weak TWX on the cheap, and break it up for a profit.
If anything, Icahn's resistence to the deal is a sign that it will strengthen TWX/AOL in the short term, at least, and possibly in the long term. That makes his job harder.