Bertelsmann Seeks Buyers for AOL Europe

LONDON (02/07/2000) - AOL Europe GmbH may be at the end of its joint venture status, as reports out of Germany say Bertelsmann AG is in talks to sell its stake to partner America Online Inc. (AOL)Representatives of the two companies declined to comment on whether talks are in progress, but there has been suggestion of a change for AOL Europe since last month's AOL-Time Warner Inc. merger.

Bertelsmann has said on several occasions that it is in talks with a number of companies, both about distributing its content and selling its stake in the 4-year-old joint venture. Time Warner's Gerald Levin further hinted at a buyout in a Financial Times article today, saying AOL Europe was a joint venture only "for the time being."

In the last several weeks, numerous European companies have expressed an interest in acquiring Bertelsmann's stake in AOL Europe, among them the French media company Vivendi, German mobile phone company Mannesmann AG, and its soon-to-be acquirer, Vodafone AirTouch. Vivendi already owns a controlling share in AOL France. Mannesmann and Vodafone both confirmed last week they had held talks with AOL Europe.

"We are happy to see such a lot of companies interested in our content and our shares in AOL Europe," said Bertelsmann spokesman Oliver Herrgesell in a Feb. 3 interview. "We've been negotiating for a while with a variety of companies such as Mannesmann, Vivendi or Vodafone, among them. Our aim is to offer our content on mobile phones or digital assistants."

Link-ups between mobile phone operators and Internet companies are the flavor of the month in Europe. In addition to a Vivendi-Vodafone joint venture announced last week, AOL Europe and Nokia joined hands today to build content for Nokia phones that use wireless application protocol (WAP) technology.

But dreams of making AOL Europe a cross-platform joint venture evaporate if the latest rumors come to pass, with Bertelsmann turning over its 50 percent stake to AOL.

Bertelsmann plans to clear itself of the AOL partnership because the German company competes heavily with Time Warner in offline media, and with the recently-acquired EMI in music production and sales. The London Guardian said today that the company's stake in AOL Europe could be worth up to US$7 billion.

Another option for Bertelsmann is to float its stake in the company on the public markets -- a move that could help raise capital for expanding its already-significant investment in new media and Internet properties.

Bertelsmann currently owns 26 percent of Lycos Europe, 50 percent of AOL Europe, and 75 percent of Gruner -- Jahr, the German publisher that owns Fireball, a leading search engine. Chairman Thomas Middlehoff said in September that Bertelsmann would invest $1.2 billion in electronic commerce and Web companies by the end of 2001. Between 1998 and 1999, the company invested more than double that amount in properties such as Lycos Europe, booksellers Barnesandnoble.com and Bol.com, and European auction site Andsold.de.

In December, Bertelsmann and Lycos began discussing an IPO (initial public offering) of the Lycos Europe venture, planning to raise some $500 million in the offering. Goldman Sachs and Deutsche Bank would lead the float on the Frankfurt Neuer Markt.

"It was part of the overall strategy of Bertelsmann to float all of their Internet companies," said analyst Carsten Schmidt of Forrester Research Inc. in Amsterdam.

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

More about America OnlineAOLbarnesandnoble.comBertelsmannDeutsche BankDeutsche BankEMIForrester ResearchGoldmanLycosMannesmannNokiaTime WarnerVivendiVodafone

Show Comments
[]