Will EarthLink Buy AOL's Dial-Up Business?

By definition, a market is made when someone wanting to buy something finds someone willing to sell it. But if that's the case, why can't EarthLink Inc. (ELNK) and AOL LLC find a way to work out a deal for AOL's dial-up Internet assets? The answer, as it often does in a transaction, revolves around money.

AOL parent Time-Warner Inc. (TWX) on Wednesday said it would formally separate AOL's dial-up access business and content and advertising businesses early in 2009, presumably making it easier for the New York-based media conglomerate to sell both units. Weakness in the Internet division was blamed to a large extent for a drop in Time-Warner's second-quarter income.

EarthLink has long been viewed as the most likely strategic buyer for AOL's dial-up business and is believed to have held talks with the company over the past nine months. EarthLink CEO Rolla Huff helped fuel speculation that the two companies might work out a transaction when he told The Wall Street Journal last week an acquisition of AOL's access business was something that was "worth aggressively pursuing."

Comments

[bass101:]

ELNK stock is so cheap, that for them to buy AOL's access business, they would have to take a price WAY below what they are hoping for. Perhaps AOL could buy ELNK, in a reverse merger. Either way, AOL's valuation expectations are going to have to come down, and the value of ELNK should rise. It's dirt cheap.

2008 Aug 08 12:25 PM