Time Warner Inc. and AOL Inc. on Monday announced the timing and details of their separation, saying AOL and its 7,000 employees will spin off from Time Warner on Dec. 9.
In hopes of creating a multi-media empire, Time Warner bought AOL in January 2001 for $164 billion. But its stock price plunged and synergies were hard to come by as AOL transformed from a self-contained online community into just another Web portal struggling to find revenue.
When AOL and its 7,000 employees are spun off as a separate company Dec. 9, stockholders as of Nov. 27 will receive one share of AOL common stock for every 11 shares of Time Warner common stock they hold.
Prior to that date, a letter detailing AOL’s business and management following the split will be sent to Time Warner stockholders, the company said.
NEW YORK – Time Warner Inc. (NYSE:TWX) and AOL Inc. today announced the timing and details regarding the spin-off of AOL from Time Warner.
The Time Warner board of directors has approved the final distribution ratio and declared a pro rata dividend of the shares of AOL common stock owned by Time Warner that will result in the complete legal and structural separation of the two companies.
On the distribution date of December 9, 2009, Time Warner stockholders of record as of 5 p.m. on November 27, 2009, the record date for the distribution, will receive one share of AOL common stock for every eleven shares of Time Warner common stock they hold.
Fractional shares of AOL common stock will not be distributed to Time Warner stockholders. Instead, the fractional shares of AOL common stock will be aggregated and sold in the open market, with the net proceeds distributed pro rata in the form of cash payments to Time Warner stockholders who would otherwise be entitled to receive a fractional share of AOL common stock.
No action or payment is required by Time Warner stockholders to receive the shares of AOL common stock. Stockholders who hold Time Warner common stock on the record date will receive a book-entry account statement reflecting their ownership of AOL common stock or their brokerage account will be credited with the AOL shares. An Information Statement containing details regarding the distribution of the AOL common stock and AOL’s business and management following the AOL spin-off will be mailed to Time Warner stockholders prior to the distribution date.
The AOL spin-off has been structured to qualify as a tax-free dividend to Time Warner stockholders for U.S. federal income tax purposes. Cash received in lieu of fractional shares, however, will be taxable. Time Warner stockholders are urged to consult with their tax advisors with respect to the U.S. federal, state, local and foreign tax consequences of the AOL spin-off.
