Tuesday, December 20, 2005


Icahn Wants AOL--Google Agreement Derailed?

NEW YORK, Dec. 19 /PRNewswire/ -- Carl Icahn today announced that he has
written an open letter to the board of directors of Time Warner Inc.
(NYSE: TWX). The text of the letter appears below.

To the Board of Directors of Time Warner:
Like all shareholders, I am not opposed to Time Warner entering into an
AOL transaction that creates long-term value. However, I am deeply concerned
that the Time Warner Board may be on the verge of making a disastrous decision
concerning an agreement with Google if this agreement would make it more
difficult in any way or effectively preclude a merger or other type of
transaction with companies such as IAC/InterActive, eBay, Yahoo!, or Microsoft
etc. etc... I believe there are and will be major opportunities to enhance
Time Warner's value in future combinations. However these transactions might
not be achievable if Time Warner enters into long-term arrangements that
preclude future flexibility such as an agreement regarding search
functionality. I also question whether Google is the best partner for
unlocking the value of the AOL asset. Indeed, a recent Goldman Sachs report
concludes, "In contrast to the conventional perspective, we believe that eBay,
followed by InterActive Corp, would provide greater incremental benefits to
AOL's option value with fewer conflicts of interest than Yahoo! while MSN and
Google would provide the least incremental benefits."
On the eve of a proxy contest, I believe it would be a blatant breach of
fiduciary duty to enter into an agreement with Google that would either
foreclose the possibility of entering into a transaction that would be more
beneficial for Time Warner shareholders or make such a transaction more
difficult to achieve. If, as is my belief other suitors interested in
transactions predicated on receipt of control of AOL have been foreclosed from
entering into negotiations, the Board's actions would be even more
questionable. The real risk for Time Warner shareholders is that a Google
joint venture may be short sighted in nature and may preclude any
consideration of a broader set of alternatives that would better maximize
value and ensure a bright future for AOL.
Once again, I am not opposed to the Board using its business judgment to
enter into a transaction with Google or another suitor so long as the
transaction does not destroy or impede Time Warner's flexibility to unlock
shareholder value in the near and long term. However, I want this letter to
serve as notice to Time Warner's directors that if they enter into a
transaction that has that effect, shareholders will seek to hold directors

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