Google, a leading Internet search company, and Comcast Corp. are negotiating a joint purchase of a stake in America Online. The expected amount of the transaction should be $ 5 billion, reports Reuters.
Google and Comcast are going to jointly acquire half of AOL’s web business, which, according to preliminary estimates, costs about 10 billion dollars. At the same time, the controlling stake may remain with Time Warner, the agency reports citing the Wall Street Journal. In addition, Google and Сomcast are threatened by competition from Microsoft, which is also in talks with AOL. All alleged participants in the transaction declined to comment.
According to a source familiar with the details of the transaction, the amount of the transaction can be significantly increased if Google and Comcast decide to buy half of the entire AOL business. However, Time Warner can block a generous offer, because Google is not the first Internet company trying to start a strategic cooperation with the company. Earlier, Yahoo tried to do the same, but the negotiations were deadlocked.
Trilateral talks between Google, Comcast and AOL have been going on since summer. Previously, AOL separately conducted talks on possible investments with Comcast and Google.
According to a Google report on the results of the first six months of 2005, the search engine receives 11 percent of revenue from a deal with AOL. Google has already discussed with AOL the possibility of cooperation in free services on America Online, including in the company’s online pagers.
AOL like hot cakes
Google Inc. together with cable operator Comcast, intends to acquire the Internet business of AOL, a subsidiary of Time Warner. Half of AOL’s shares will cost companies no less than $ 5 billion. According to unofficial information, Microsoft is competing with Google and Comcast for AOL.
Google Inc., which already owns a 11% stake in America On Line, has become interested in AOL’s web resources, Time Warner Inc.’s web division. Last week, Google held talks with cable company Comcast on the joint acquisition of Time Warner Inc.’s web-based business.
Google and Comcast estimate AOL’s entire business at $ 10 billion. Companies count on half and claim that the transaction could cost them no less than $ 5 billion – despite the fact that companies still do not have an approved investment plan in AOL.
If a Google and Comcast deal with AOL takes place and companies own half of this business, Time Warner will not lose the right to make strategic decisions.
Experts claim that the integration of the software base Time Warner and Google search engine, as well as Comcast, providing cable television and telecommunications, will be very successful. In addition, the group of companies will be able to jointly make a serious competition to such giants of the high-tech market as Yahoo Inc. and Microsoft Corp.
Google and Comcast have not yet decided who will become the minority shareholder of Time Warner’s online business. Nor is AOL’s web assets business strategy defined.
Analysts say that companies should not waste time on disputes among themselves.
The decision should be made as soon as possible, since information has already appeared that Google’s main competitor, Microsoft, has become interested in AOL assets.
At the same time, sources close to Comcast say that the acquisition of AOL for Comcast is attractive, but has no strategic value. The same sources report that Microsoft’s negotiations with AOL are much more solid and long lasting.
According to unofficial information, many companies are interested in Time Warner web business, including Yahoo Inc. But, according to sources who wished to remain anonymous, negotiations between Time Warner and Yahoo ended at an early stage.