Stage Set For Aol Ipo In '08

Google's purchase of 5% of America Online from Time Warner might pave the way for an initial public offering of AOL some time around July 2008, the companies disclosed in a filing with the U.S. Securities and Exchange Commission.

If Google wants to cash out its $1 billion investment in AOL via an IPO and parent company TW objects to the strategy, TW can choose instead to purchase Google's stake back at "an appraised fair market value," according to Friday's filing.

The filing also indicates that, while TW is permitted to sell its 95% of AOL, Google "may not transfer equity interest" of its 5% stake independently of TW.

While an IPO of AOL might please such notable interested parties as dissident shareholder Carl Icahn and former AOL chief executive Steve Case, who both have suggested such a scheme, TW chief executive and chairman Dick Parsons has made no indications that a spinoff of AOL is desirable.

Parsons, in fact, has maintained that the best way to extract value for shareholders from the media conglomerate's AOL unit is through its newly inked partnership with Google.

That deal has many moving parts, including the linking of AOL's massively popular AIM instant messaging service to Google's similar offering; Google's ability to draw from AOL's impressive video library; and various initiatives for taking advantage of the fast-growing Internet advertising market.

Under Parsons' current employment arrangement with TW, though, the CEO would retire about two months before Google's ability to demand an IPO would kick in.

Parsons last week promoted Jeff Bewkes to president and chief operating officer of TW, perhaps grooming him for the top slot at the world's largest media company, though Parsons gave no indication as to when he might choose to leave the company.

AOL, of course, has been a separate, publicly traded company before. It went public in 1992 at $11.50 a share. Its shares sunk to penny-stock status then rose high enough to make AOL one of the most valuable companies in the world before they were used as currency to merge with TW.

When announced in January 2000, the value of the two companies, which together were known as AOL Time Warner, was about $350 billion, and AOL shareholders were to get 55% of the combined company.

Shares of TW closed Friday at $17.68, giving the company an $82.4 billion market capitalization.