NEW YORK -- Media giant Time Warner Inc. and top Internet services provider America Online Inc. Monday agreed to merge in an all stock deal, creating a multimedia behemoth with a market capitalization of $350 billion.
America Online Chairman and Chief Executive Steve Case was named chairman of merged company, while Time Warner's Chairman and Chief Executive, Gerald Levin, will be chief executive, the companies said in a statement.
Under terms of the definitive deal, which has been approved unanimously by both boards of directors, Time Warner and America Online stock will be converted to AOL Time Warner stock at fixed exchange ratios.
Time Warner shareholders will receive 1.5 shares of AOL Time Warner for each share of Time Warner stock they own while AOL shareholders will receive one share of AOL Time Warner stock for each share of AOL they own.
AOL shareholders will hold 55 percent of the merged company, while Time Warner shareholders will hold 45 percent, even though AOL's market capitalization prior to the deal was nearly twice the value of Time Warner's.
Dulles, Va.-based America Online has a market capitalization of about $163 billion, while New York-based Time Warner has a market capitalization of $83 billion, based on the closing stock prices Friday.
By uniting a major media conglomerate with a leading Internet company, the transaction is likely to have major repercussions across a broad sweep of industries.
It comes at a time when many big media companies are struggling to figure out how to harness the power of the Internet, and when Internet companies are increasingly looking to put entertainment and other content on their Web sites to attract more customers.
