Time Warner and AOL - Worst merger of all time?

(By Richard Holway 6.00pm 28th May 09) Time Warner has announced that it is to separate AOL as a independent company. To do this they will buy back Google's 5% share.

Time Warner bought AOL back in the heady dot.com days of 2000 for $147b forming a $350b business. AOL was a leader in dial-up internet access (Oh, how I remember that!) but its fortunes have declined ever since. In 2007, Google bought a 5% stake for $1b or a $20b valuation. They have just written that down by $726m.

Now you'd be lucky to find anyone willing to put a valuation of more than $3-$5b valuation on AOL. And, don't forget, AOL now includes Bebo which they bought for $850m a couple of years back.

So what will happen to AOL now? Will Microsoft buy it? You'd have to question why at almost any price.