SEC Watch: Time Warner Buys Back Google’s AOL Interest For $283 Million

AOL Changes

In preparation for the pending spin off, Time Warner (NYSE: TWX) filed a form 10 with the SEC today for AOL Inc., the name the company will be known by as a Delaware corporation. One tidbit to start: Time Warner bought back Google (NSDQ: GOOG) 5 percent interest in AOL on July 8 for $283 million; that includes a payment covering Google’s share of cash AOL contributed to Time Warner during its ownership. That means the actual fair market value of the 5 percent stake is even lower than the payment — and that the value placed on AOL was less than $5.66 billion.

The purchase finally unwinds a deal dating back to late 2005, when Google beat out Microsoft (NSDQ: MSFT) for AOL’s search business — in part, by buying the 5 percent stake for about $1 billion and allowing AOL to be valued at nearly $20 billion. Last summer, Google starting the process of writing down much of its investment; this past February, Google demanded that Time Warner spin off AOL or buy back its shares for fair market. While AOL is being spun off, Time Warner opted for the latter.

AOL’s Patch pay: AOL paid approximately $7 million in cash to pick up hyper-local start-up Patch on June 10. AOL Chairman and CEO Tim Armstrong owned 75 percent of the company through his Polar Capital Group, LLC. His original investment was $4.5 million; he stands to recoup all of that once $700,000 being held back clears escrow. But there’s a twist: he’s turning back the money to AOL until after the spin off; Polar will get $4.5 million in AOL stock after the spin. It doesn’t saw how much Patch CEO Jon Brod, now EVP and head of AOL Ventures, made.

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