AOL to be unwound from Time Warner

Time Warner has announced that it intends to separate and sell off AOL later this year.

The media giant's board of directors has approved a plan to begin the complete legal and structural separation of the internet service provider arm of AOL, which is set to become an independent, publicly traded company.

In order to carry through with the deal, Time Warner, which owns 95 per cent of AOL, will buy the remaining five per cent of shares from Google before offering them all up to shareholders.

AOL bought Time Warner for $147 billion in 2001 but soon after the profitability of ISPs suffered, leading to a record loss of $99 billion for the group the following year.

Jeff Bewkes, chairman and chief executive of Time Warner, said a separation of the company was the "best outcome" for both parties.

"The separation will be another critical step in the reshaping of Time Warner that we started at the beginning of last year, enabling us to focus to an even greater degree on our core content businesses," he said.

"The separation will also provide both companies with greater operational and strategic flexibility. We believe AOL will then have a better opportunity to achieve its full potential as a leading independent Internet company."

Tim Armstrong, chairman and chief executive officer of AOL, said the move represented a "great opportunity".

"Becoming a standalone public company positions AOL to strengthen its core businesses, deliver new and innovative products and services, and enhance our strategic options," he said.