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Google has sold its original $1 billion stake in AOL back to parent company Time Warner for $283 million. Google (NASDAQ:GOOG) originally purchased the large interest in AOL in late 2005 and in return received a 5-year contract to be AOL’s default search engine. The search partnership will not expire until next year, when it may be renewed AOL stated in a regulatory filing.
AOL, which has already announced it will be spun-off from parent company Time Warner, said $678 million of its $2 billion revenue resulted from the advertising partnership with Google during that time frame.
This puts AOL’s current valuation at $5.7 billion, far short of the original $20 billion valuation from when Google bought stake in the search company.
Time Warner (NYSE:TWX) and AOL merged in 2001, but with AOL’s profits tanking in recent years, Time Warner has begun to distance themselves from the tumbling brand. The spin-off was announced shortly after former Google head of US Sales Tim Armstrong was brought on as the new CEO of AOL.
The new company will be called AOL Inc. and has already cut 10% of its employee base and incurred over $58 million in restructuring costs, with an additional $90 million in additional restructuring expenses before the end of the year.
AOL is working to reduce expenses and centralize its business. Chief executive Armstrong has stated, “a big part of fixing AOL is getting AOL to believe in itself.”
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