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Time Warner buys back Google’s stake in AOL

Google sells stake at a loss of $717m

By CBR Staff Writer

Media conglomerate Time Warner has bought back the 5% stake owned by Google in AOL earlier this month, according to the regulatory filing with the Securities and Exchange Commission.

Time Warner has paid $283m for Google’s stake, which implies that AOL has a total value of less than $5.7 billion. Time Warner which plans to spin off AOL, purchased Google’s stake on July 8th. Time Warner and AOL, formerly known as America Online, were merged in 2001.

The filing marks the latest in the separation between Time Warner and AOL. Earlier, Google had bought 5% stake in AOL in December 2005 for $1 billion as part of its advertising partnership for five years. It valued the total unit at $20 billion. It implies that Google has sold its stake at a loss of $717m.

As part of the 2005 deal, AOL had agreed to use Google’s search services on an exclusive basis through December 2010, according to the filing.

Time Warner shareholders are expected to own all outstanding interests in AOL, once the separation between the Time Warner and AOL is completed. AOL has hired the former Google executive Tim Armstrong to lead the company after it gets separated from Time Warner later this year.

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