AOL, Time Warner confirm merger

Internet giant America Online (AOL) and media conglomerate Time Warner have announced that they plan to merge.

The two companies said that the merger would create a company with a value of $350bn, making it the largest merger in history.

AOL currently has a market capitalisation of $163.4bn, while Time Warner is valued at $83.3bn.

Time Warner's Gerald Levin will be chief executive of the enlarged group and AOL's Steve Case will become chairman.

The boards of both companies approved the merger unanimously.

AOL shares surge

AOL shareholders will hold a majority stake in the merged company of 55%, despite the fact that AOL's value on the stock market is nearly twice that of Time Warner.

In electronic trading, AOL shares were up 19% on the news.

Time Warner shares gained more than 12%.

The proposed deal is a stock-for-stock merger. Time Warner share holders will get 1.5 shares of AOL Time Warner stock.

Other media companies surged as well on the news. In London the share price of Granada and Pearson gained strongly.

Old media meets new media

If the deal goes through, it will make a dramatic impact on both the media and the online services industries.

Online firms are fighting hard to get attractive content onto their sites. Media companies, meanwhile, are struggling to harness the power of the internet.

Time Warner describes itself as one of the world's leading media companies. It owns the cable television channels CNN. TNT, Cartoon Network and Home Box Office and is a publisher of magazines, books and web sites.

Time and People are amongst its best-known magazines.

The company is active in the music business, produces feature films, television programmes and animation, and operates a cable business.

Time Warner employs 69,000 people around the world and reported revenues of nearly $27m.

AOL is the world's largest internet service provider.

Founded in 1985, AOL has transformed itself from an online service to a provider of interactive services, Internet technologies and e-commerce services.

The company runs two global online services, AOL with more than 20 million members, and CompuServe, with more than 2.2 million members.

In 1999, AOL shocked the online world when it bought internet pioneer Netscape. Other brands owned by the company are internet messaging service ICQ and Digital City.

AOL has a strategic alliance with computer and software firm Sun Microsystems, targeted at undermining the dominance of Microsoft in the computer business.