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AOL mops up Bertelsmann stake

Time Warner makes them best of enemies

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It's been on the cards since AOL acquired Time-Warner, but now it's happened: AOL has agreed to buy Bertelsmann's 50 percent stake in AOL Europe and AOL Australia to AOL for $6.75 to $8.25 billion - but not until after January 2002. In Europe, AOL has around 15 per cent of the market, according to Datamonitor. CEO Thomas Middelhoff told Welt am Sonntag that Bertelsmann now has DM75 billion ($37 billion) for acquisitions after deciding to concentrate on content. The sum is arrived at if Bertelsmann mortgages the AOL cash, if it is needed before the transaction closes. Immediate plans are to fill gaps in Bertelsmann's Hispanic, French, Italian and Asian portfolio, with perhaps US newspaper acquisitions and more TV interests in Europe. Another objective is probably an increased presence in online book sales -- the company has been digitising all its intellectual property with a view to selling on-demand books over the Web. So far, Bertelsmann has sold AOL shares worth more than DM1 billion. After the disposals, Bertelsmann will still have 0.7 per cent of AOL, which it intends to sell at an opportune moment, Middelhoff said. Middelhoff had announced his resignation from the AOL board, if the Time-Warner merger went through, because in some areas there was direct competition. The subsequent intended merger between Time-Warner and EMI extended the area of overlap to the music business, after Bertelsmann failed to acquire EMI. However, Sony Music could still be a Bertelsmann target. BOL International, the Internet music/bookstore will also be floated next quarter, it was announced over the weekend. Bertelsmann was given the chance to merge with AOL before the Time-Warner deal was sealed, but declined to do so, according to a report in Time Europe. ®

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