NEW YORK — Google’s upcoming blockbuster IPO should generate a cash and valuation windfall for Time Warner.
In a Securities and Exchange Commission filing Monday, the Internet search phenom said it was aiming to raise some $3.3 billion in its public stock offering next month, with shares initially priced between $108 and $135 each.
Based on that range, Time Warner’s 2.8% stake in the Web search leader would be worth $800 million-$1 billion, said Fulcrum analyst Rich Greenfield.
That’s found money for Time Warner, which continues to see its shares depressed amid its ongoing SEC investigations and concerns over the future of AOL.
Time Warner indicated that it intends to sell 10% of its 743,745 shares in Google as part of the IPO, which would generate up to $100 million in pre-tax cash.
Greenfield said he would expect Time Warner to consider some kind of “strategic transaction” (such as asset swaps) with Google to monetize the remainder of the stake tax efficiently.
“While the aggregate value per Time Warner share is small, it is all incremental value that is not factored into Wall Street expectations or valuation,” Greenfield wrote in a note Monday.
The much-anticipated Google IPO will likely yield a market capitalization as high as $36 billion, making it worth slightly less than Yahoo! ($37 billion) and considerably more than Barry Diller’s e-commerce empire, InterActiveCorp ($19.7 billion), or online retailer Amazon ($15.3 billion).
Road show begins
The Google road show to prospective investors kicks off today, with trading expected to begin by mid-August under the ticker symbol GOOG.
For the second quarter of 2004, Google said it generated a net profit of $79.1 million and operating income of $171 million. Revenue was up 7.5% from the first quarter to $700.2 million. Google reported total sales last year of $1.4 billion.
Roughly 24.6 million shares will be sold in the IPO, while Google and other shareholders plan to sell another 24 million shares.
Net proceeds of around $1.66 billion are earmarked for general corporate purposes.