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Internet leader and entertainment firm to join forces; new company worth $350B

NEW YORK (CNNfn) - In a stunning development, America Online Inc. announced plans to acquire Time Warner Inc. for roughly $182 billion in stock and debt Monday, creating a digital media powerhouse with the potential to reach every American in one form or another.
With dominating positions in the music, publishing, news, entertainment, cable and Internet industries, the combined company, called AOL Time Warner, will boast unrivaled assets among other media and online companies.
The merger, the largest deal in history, combines the nation�s top internet service provider with the world�s top media conglomerate. The deal also validates the Internet�s role as a leader in the new world economy, while redefining what the next generation of digital-based leaders will look like.
"Together, they represent an unprecedented powerhouse,� said Scott Ehrens, a media analyst with Bear Stearns. "If their mantra is content, this alliance is unbeatable. Now they have this great platform they can cross-fertilize with content and redistribute.�

The deal, if approved, calls for Time Warner shareholders to receive 1.5 shares of the new company for every share of Time Warner stock they own. AOL shareholders will receive one share of the new company for every AOL share they hold.
The new company will be 55 percent owned by AOL and 45 percent owned by Time Warner. The combination will immediately boast a market capitalization of $350 billion and an annual revenue stream topping $30 billion.
More importantly, it provides AOL, which already boasts more than 20 million subscribers through its AOL and Compuserve Internet services, high-speed broadband access to Time Warner�s more than 13 million cable subscribers, further reinforcing its position as the nation�s top online provider.

In return, Time Warner -- parent company of a broad range of media outlets, including Warner Bros. Studios, HBO, CNN, Warner Music, Time magazine and -- gains a powerful national and growing international platform upon which to distribute and promote its sizable products.
"I don�t think this is too much to say this really is a historic merger; a time when we�ve transformed the landscape of media and the Internet,� said Steve Case, AOL�s chairman and chief executive officer. "AOL-Time Warner will offer an incomparable portfolio of global brands that encompass the full spectrum of media and content.� (508K WAV) (508K AIFF).
In fact, Case said it�s hard to imagine a home in the United States that is not touched by Time Warner or AOL in some way, be it television, movies, music or the Internet.
Analysts noted the deal also represents a fundamental shift in not only how content providers will be structured in the new digital economy, but how online companies are valued in the future.
The deal is significant in that although...