Monday, February 09, 2009


"Fools rush in where angels fear to tread." - Alexander Pope

"Fools rush in...." - I think this is the title of a book which described in gory details what happened during the merger of AOL and Time Warner a few years back. I think it was the largest merger back then. Also a very special one. A new economy company was buying an old economy company. AOL which was only few years old had astronomical valuation due to its stock price which was not anywhere close to earth. With that kind of valuation it was not difficult for AOL to make a bidding for Time Warner which is a large solid brick & mortar company. What followed is a history! That merger like many mergers did not work out. Destroyed billions of dollars worth of market value of combined company. AOL was anyway a dot com company. But, Time Warner was a solid old economy company which got sucked into the madness. It took several CEOs to clean up the mess. Despite all that Time Warner never regained its old stature. Funny thing is that Time Warner, after a few years, had enough. By then it was also clear what was real value of AOL. Reality and common sense prevailed. Some smart heads in the company started seeing AOL part more of a liability than asset. They decided to spin off AOL and be done with it. Thus ended one of the largest corporate jokes of all times.

"Fools rush in" is a great read.


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