Time Warner To Sell 5% Stake to Google
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Time Warner, under investor pressure to break up the company, agreed to sell Google a stake in America Online to help revive the Web unit’s sales.
Google, the most-used Internet search engine, will buy 5% of AOL for $1 billion, the companies said in a statement yesterday after the board of New York-based Time Warner approved a tentative agreement reached last week. AOL and Google will extend their current partnership to share more ads and Web content.
The purchase may help the chief executive of Time Warner, Richard Parsons, bring more visitors to AOL’s site as billionaire investor Carl Icahn pushes him for changes to lift the company’s stock price.
It also allows Google to hold onto its biggest search customer and delivers a blow to Microsoft, which tried for almost a year to sell its own search technology to AOL.
“Google is an aggressive suitor,” an analyst at Piper Jaffray & Co. in Menlo Park, Calif., Safa Rashtchy, said before the announcement. “It keeps Microsoft away so that they won’t gain any scale and Google’s market share remains very high.”
Mr. Parsons, 57, and Google’s chief executive officer, Eric Schmidt, reached the agreement late last Thursday in New York, after about four months of discussions. Mr. Parsons phoned the Microsoft chief executive Steve Ballmer the next morning to tell him the news.
