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Send to email | Will Google (GOOG) Exercise Right To Force AOL IPO? No. in TWX | By Silicon el 01-Jul-2008 |
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Google's right to force Time Warner (TWX) to take AOL public or buy back Google's 5% stake takes effect today. (For background, please see this post).
Will Google exercise this right? In our opinion, no. (Or, rather, not yet.)
Why not?
Because Google's portion of AOL is probably worth about $500 - $750 million (as compared to the $1 billion Google paid for it). Google doesn't need the cash, and it doesn't have anything to gain by forcing AOL to be a public company.
Just as important, at least for now, Google's stake and IPO rights likely give it some ability to influence what Time Warner does with AOL--a feature that could come in handy if Microsoft decides to make a play for the company. Given the belligerent relations between Google and Microsoft, Google might want to try to block or delay an acquisition of AOL by Microsoft, if this should become relevant. (It could also try to ensure that AOL's contract with Google search be extended as a condition of any sale.)
Regardless of what happens with AOL, Google will likely have more options by continuing to hold its stake, so we think it will continue to sit quietly and feel the AOL pain.
See Also: Clock Ticking on Google's Right to Force an AOL IPO

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