AOL will officially be spun off from Time Warner on December 9, with trading to begin the next day.
Shareholders of record at 2 p.m. PST on November 27 will get one share of AOL for every 11 shares of Time Warner on the day of the long-expected spinoff of the Internet service.
At Time Warner's current market cap of $38 billion, that gives AOL an implied value of $3.2 billion--a fraction of Google's $20 billion valuation of the portal in 2005, when it invested $1 billion in the property. And it's even lower than the $5.5 billion valuation Google gave the company last January, when it wrote down its investment.
AOL will trade on the New York Stock Exchange as "AOL."
Ironically, before it merged with Time Warner at the dawn of the new century, AOL previously traded on the NYSE.
AOL went public on Nasdaq on March 19, 1992, under the ticker "AMER," and moved to the NYSE on Sept. 16, 1996, trading as "AOL."
(Fun fact: BoomTown actually attended both the fancy dinner the night before AOL moved to the NYSE from Nasdaq and the AOL party on Wall Street the next day.)
If you want to get really technical, AOL common stock will begin trading on a "when-issued" basis--you really don't want to know the confusing regulatory details of why--on the NYSE under the symbol "AOL WI" beginning on November 24.
On December 10, when-issued trading of AOL common stock will end and "regular-way" trading under the symbol "AOL" will begin.
After that, it will be up to CEO Tim Armstrong to make the long-suffering AOL into the little Internet company that could.
The separation of AOL and Time Warner is also symbolic, dismantling the most potent symbol of Web 1.0, when AOL essentially got control of the media giant, only to see the merger crash in disaster.
If at first you don't succeed...
Here's the full Time Warner press release on the transaction:
Time Warner Declares Spin-off Dividend of AOL Shares
Record and Distribution Dates and Final Distribution Ratio Announced
NEW YORK-(BUSINESS WIRE)-Nov. 16, 2009-Time Warner Inc. (NYSE:TWX) and AOL Inc. today announced the timing and details regarding the spin-off of AOL from Time Warner.
The Time Warner board of directors has approved the final distribution ratio and declared a pro rata dividend of the shares of AOL common stock owned by Time Warner that will result in the complete legal and structural separation of the two companies.
On the distribution date of December 9, 2009, Time Warner stockholders of record as of 5 p.m. on November 27, 2009, the record date for the distribution, will receive one share of AOL common stock for every eleven shares of Time Warner common stock they hold.
Fractional shares of AOL common stock will not be distributed to Time Warner stockholders. Instead, the fractional shares of AOL common stock will be aggregated and sold in the open market, with the net proceeds distributed pro rata in the form of cash payments to Time Warner stockholders who would otherwise be entitled to receive a fractional share of AOL common stock.
No action or payment is required by Time Warner stockholders to receive the shares of AOL common stock. Stockholders who hold Time Warner common stock on the record date will receive a book-entry account statement reflecting their ownership of AOL common stock or their brokerage account will be credited with the AOL shares. An Information Statement containing details regarding the distribution of the AOL common stock and AOL's business and management following the AOL spin-off will be mailed to Time Warner stockholders prior to the distribution date.
The AOL spin-off has been structured to qualify as a tax-free dividend to Time Warner stockholders for U.S. federal income tax purposes. Cash received in lieu of fractional shares, however, will be taxable. Time Warner stockholders are urged to consult with their tax advisors with respect to the U.S. federal, state, local and foreign tax consequences of the AOL spin-off.
Shares of Time Warner common stock will continue to trade "regular way" on the New York Stock Exchange ("NYSE") under the symbol "TWX" through the distribution date of December 9, 2009, and thereafter. Any holders of shares of Time Warner common stock who sell Time Warner shares regular way on or before December 9, 2009, will also be selling their right to receive shares of AOL common stock. Investors are encouraged to consult with their financial advisers regarding the specific implications of buying or selling Time Warner common stock on or before the distribution date.
AOL common stock will begin trading on a "when-issued" basis on the NYSE under the symbol "AOL WI" beginning on November 24, 2009. On December 10, 2009, when-issued trading of AOL common stock will end and "regular-way" trading under the symbol "AOL" will begin. The CUSIP number for the AOL common stock will be 00184X 105 when regular-way trading begins.
Time Warner and AOL have entered into a Separation and Distribution Agreement and several other agreements related to the AOL spin-off. The completion of the AOL spin-off is subject to the satisfaction or waiver of a number of conditions, including the Registration Statement on Form 10 for the AOL common stock being declared effective by the Securities and Exchange Commission ("SEC"), the AOL common stock being authorized for listing on the NYSE and certain other conditions described in the Information Statement included in the Form 10 and in the agreements filed as exhibits to the Form 10. The condition relating to the authorization of the AOL common stock for listing on the NYSE has been satisfied, and today AOL sent a letter to the SEC requesting that the Form 10 be declared effective. Time Warner and AOL expect all other conditions to the AOL spin-off to be satisfied on or before the distribution date.