AOL has bought back the 5% stake in its company that Google had purchased back in 2005, when Google started making an invested interest in the company and its use of Google search technology to power AOL Search. Yesterday AOL bought back its 5% for only $283 million, which is about 28% of the original purchase price of $1 Billion by Google in 2005.
The buy back of the Google interest in AOL is part of Time Warner’s strategy to spin off AOL into its own separate and publicly traded entity, which is now valued at $5.66 Billion.
Google, being somewhat of a loser in this deal (keep in mind the 5% stake included Google exclusivity of sponsored listings in AOL search and probably user data info via search behavior), but the revenue may have been made up in different ways.
Google had started working with AOL in May to get back it’s stake in the company : “Google is demanding AOL to buy back its investment to their company at a reduced value of $726 million. This would reduce AOL’s unit valuation to only $5.5 Million.”
And the company released this statement in May about Google and AOL remaining strategic partners :
AOL remains an extremely valued partner, and we’ll continue to work closely together to provide their users with the best search experience possible. After careful consideration, we made the decision that we needed to exercise our rights now so we could be in a position to sell our interest when the timing made sense for us.
We’ll see how long that lasts, especially with Microsoft making aggressive partnership moves in search this week, targeting Yahoo for Bing distribution … AOL may be next.