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.

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