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The AOL and Time
Warner Merger
BVCR
Aarushi Jain
Deepak Jain
Irfan Warsi
Himanshu Hirwani
Chirag Bohra
Company Background
AOL
● ISP in US in high technology
and in growth phase
Time Warner
● Mature Technology
AOL Time Warner
● In Jan 2000, it had been announced the
Merger between AOL and Time Warner
● The Merger aimed to
¤“Create...
Deal Information
● The merger was structured as a stock swap
● AOL shareholders would receive 1 new share for each
share i...
Question 1
Are major problems likely when combining
different cultures in this combination of “Bricks
and clicks”?
Bricks
● More focus on process
● More Focus on Raw
Materials
● Focus on breakthrough
technology
● Asset focussed company
●...
Problems after merger
● No Synergy was obtained from the merger as thought of.
● Each division was working separately.
● H...
Question 2
Discuss the issue of the integration of diverse
compensation Structures between Time
Warner and The AOL?
● Management did not take into account the importance of Organizational
Culture and Structure for ensuring survival.
● The...
Question 3
Has the merger yielded the synergies
forecasted for 2001 and 2002?
Currently they are Separate
companies
Thank you
aol and warner merger
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aol and warner merger

aol and warner merger

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aol and warner merger

  1. 1. The AOL and Time Warner Merger BVCR Aarushi Jain Deepak Jain Irfan Warsi Himanshu Hirwani Chirag Bohra
  2. 2. Company Background AOL ● ISP in US in high technology and in growth phase Time Warner ● Mature Technology
  3. 3. AOL Time Warner ● In Jan 2000, it had been announced the Merger between AOL and Time Warner ● The Merger aimed to ¤“Create the world’s first fully integrated media and communication company for the internet century in an all stock combination valued at $350 Billion”
  4. 4. Deal Information ● The merger was structured as a stock swap ● AOL shareholders would receive 1 new share for each share in AOL. ● TWX shareholders would receive 1.5 new share for each share in TWX. ● 70% premium price was decided ● Because of AOL‟s higher market capitalization, its shareholders would own 55% of the new company. ● Company initially valued at $350 billion
  5. 5. Question 1 Are major problems likely when combining different cultures in this combination of “Bricks and clicks”?
  6. 6. Bricks ● More focus on process ● More Focus on Raw Materials ● Focus on breakthrough technology ● Asset focussed company ● No or Low Goodwill ● Old Culture ● Large Organization ● New products and division take time to add Clicks ● More focus on results ● No focus on raw materials ● Focus on creativity and innovation ● Not too much Assets in the company ● Higher goodwill ● New Culture ● Small Organization ● New products and divisions are easy and quick
  7. 7. Problems after merger ● No Synergy was obtained from the merger as thought of. ● Each division was working separately. ● Human resource integration did not happened properly. o Top management was just mixed, they were not divided based on their capabilities o Employees might have felt uncomfortable because of different working environment. ● Who will own the management ● Over Valuation of AOL: It is very difficult to evaluate any software company as compared to other asset based companies, because assets can easily be evaluated as compared to any innovation based company. ● Good will of the company was too much and has lost its value from $220 billion to $20 billion.. ● Technology Risk was not considered: Internet bubble burst created problem for the company.
  8. 8. Question 2 Discuss the issue of the integration of diverse compensation Structures between Time Warner and The AOL?
  9. 9. ● Management did not take into account the importance of Organizational Culture and Structure for ensuring survival. ● The company failed to address Cultural Differences among its employees, although it had unmatched physical, technological, and human resources. ● The Structure of the management team caused huge conflicts among employees, specially from Time Warner’s side. ● The company also suffered from AOL’s surprising devaluation because of the dot-com bubble.
  10. 10. Question 3 Has the merger yielded the synergies forecasted for 2001 and 2002?
  11. 11. Currently they are Separate companies
  12. 12. Thank you

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