Extra Practice News Story #7: Business

Time Warner Inc. Has Been Offered a Takeover Bid
Posted: 1:45 p.m. PT, March 9, 2007

Palo Alto, Calif.- Google Inc. (GOOG) is interested in purchasing Time Warner Inc. (TWX), the news just broke that Google made a hostile takeover bid. The purchase price has been reported at $50 billion in cash and stocks. Google has given Time Warner a 30 day period to make a decision about this matter. The Federal Communications Commission (FCC) will need to approve this takeover after negotiations have been made in order for this merge to actually take place. Each of the representatives from both companies told very little detail about the deal, and said that the details will be negotiated. Analysts seem excited about this move and what it will do for the industry.

The CEO for Time Warner, Richard D. Parsons, seemed very surprised when he said “This is the only written offer we’ve received for the entire company.” He said that the timing seems interesting where things are moving so quickly in the industry and the distribution is changing. “We have to think globally,” he commented. Time Warner plans to take the entire 30 days to determine whether the value is worth it, and how they will actually benefit from this move. He showed concern for the current employees when he said, “We are going to make the best decision to take care of our employees.”

Dr. Eric Schmidt, CEO of Google, said that when they offer a bid they try to overestimate the value with hopes of winning the bid. He commented that this is a perfect merger to bring distribution together. He said the timing is a lot better then it was for Time Warner and AOL, and perhaps this merger could be a second life for AOL.

Paul Kim, an industry analyst from Traditional Aerial Securities Inc. commented that the stockholders are ready for this move. He talked highly of Google as an overall company by saying “Their customers are happy and they are growing fast.” He also said that if this merge were to take place, there will definitely be some advancements in this Internet age. He feels that this move will be a “Major catalyst in other companies doing the same thing.”