Google's AOL Stake Rolling Into Holding Company It Can Take Public In 2008

I got a research note from Ben Schachter over at UBS Investment Research flagging that Google has now filed an 8-K form on the AOL deal that sheds light on some new details, include rolling its AOL stake into a new company that it can take public in 2008. You'll find the filing here. Highlights below:

  • Some of the exact details of the agreement are still being worked out. That's expected to complete the first quarter of next year.
  • Should some details not be agreed, a resolution will be reached through binding arbitration.
  • Google is going to hold its 5 percent share of AOL through a new limited liability company (either called HoldCo or that being the term used to indicate a yet to be named holding company)
  • Google can sell the HoldCo interests in a public offering as of July 1, 2008 or afterward (so you're were right, John -- it is a second IPO, but in a different way than you thought!).
  • AOL can prevent a sale by exercising its right to purchase HoldCo from Google at an appraised fair market value.
  • The deal runs for five years, substantially longer than any previous deal Google and AOL have had.
  • It covers AOL being able to sell text ads on its own site in addition to carrying the same type ads from Google.
  • It covers AOL being able to sell display ads on the Google network.
  • It covers AOL being promoted on Google "consistent with Google principles," plus AOL receiving ad credits.
  • Google will fund marketing efforts for AOL through third party media outlines to promote agreed upon properties.
  • It covers the previously promised help for AOL and Time Warner to understand how to be indexed by Google better: "We have agreed to assist AOL and Time Warner in understanding our published and/or publicly available tools for improving the accessibility of a web site?s content to Google?s web crawlers."
  • Google Talk users will have to register their names with AIM in order to interact with AIM clients.