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1. Introduction
a. Timeline of Events
2. AOL Company Overview
a. Company History
b. AOL Business Model
c. Market Situation Prior to Merger
3. Time Warner Company Overview
a. Company History
b. Time Warner Business Model
c. Market Situation Prior to Merger
4. AOL Time Warner Merger
a. Reasons for Merger
b. Proposed Synergies
c. Terms of the Merger Agreement
d.
Market Reaction to Merger
5. AOL Time Warner Post-Merger (Descriptive)
a. Financial Performance
b. Issues
c. Failure to Realize Synergies*
Research Questions:
6. AOL Time Warner Merger: Was the Merger a Mistake?
a. Value Destruction
i. Little/no synergies
ii. Revenues fell, costs increased
iii. Goodwill impairment
iv. SEC/Shareholder Lawsuits
v. Debt ratio not optimal
b. Erosion of Stakeholder Value
i. Shareholders
ii. Debt holders
iii. Management and employees
c. Lessons from Merger
7. Was the Split between AOL Time Warner Overdue? Post-merger perspective i.e.
from 2001 onwards
a. When did negative signals start to surface?i. Declining revenue, corporate culture clash, falling share price, high
key management turnover, integration problems, large-sell off by
strategic investors
b. Management reaction to problems
c. They took a long time to respond to problems and business changes; slow in
making fast decisions
8. Lessons from Merger (Refer to Lecture Notes, Management Overconfidence can lead
to disastrous outcomes)
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9. Conclusion