EXTRA Practice News Story: Business

Extra Practice News Story: Business
October 31, 2007
Madison Hintze
Google Surprises Time Warner with Unsuspecting Hostile Bid

Palo Alto, California-Time Warner Inc. (TWX) was not expecting the offer that Google Inc. (GOOG) made recently. Google offered Time Warner $60 billion for a complete buyout. Eric Schmidt, CEO and Chairman of Google Inc. said, “We’ve over priced the value in their (Time Warner) stock. We wanted to make the offer more appealing.” Google Inc. began as an information search engine, and now wants to be known as a content provider. “We don’t have a top notch facility to produce content, Time Warner does.” Said Schmidt. Schmidt thinks that Google has a good track record to make this happen. The sum of $60 billion, if Time Warner accepts the offer, will be paid in $10 billion cash, $45 billion in stocks, and $5 billion in assumed debt. The actual figured price that Time Warner would have expected for a complete buy out would have been $45 billion in stocks and $5 billion in assumed debt. Google threw in the $10 billion cash as an extra incentive.
Time Warner has not yet met as a board to discuss the offer that was made to the company. Richard D. Parsons, CEO of Time Warner Inc. said, “A buyout option has never been discussed up to this point, only mergers have come up. We don’t even know how Google came up with the $60 billion offer.” This is a decision that will take some time and is not something that Time Warner plans on rushing into anytime soon, however, that does not mean they have completely opposed the option of the buyout.
Terry Semel, CEO and Chairman of Yahoo! (YHOO) and Steve Ballmer, CEO of Microsoft (MSFT), were both contacted, however, neither made a statement of the situation at hand.
Paul Kim, an Industry Analyst said that Time Warner would be foolish not to accept the offer from Google. “As for the whole industry, it seems to make sense. This may be another match made in heaven that goes to hell, but I don’t think so,” said Kim.