SEC Filings

S-4/A
TIME WARNER INC. filed this Form S-4/A on 03/24/2000
Entire Document
 
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   Pro Forma Merger Analysis.  Morgan Stanley analyzed the pro forma effect of
the merger on each of Time Warner's and America Online's actual and projected
revenue and EBITDA for fiscal 1998 to fiscal 2001, based on publicly available
Morgan Stanley research estimates, compared to the revenue and EBITDA growth
rates of Time Warner and America Online on a standalone basis in each of the
selected years.
 
   The analysis indicated that the merger would increase the revenue and EBITDA
growth rates of Time Warner compared to the revenue and EBITDA growth rates of
Time Warner on a standalone basis for the period selected as follows:
 

<TABLE>
<CAPTION>
                                                               Estimated 1999-
                                                                2001 Compound
                                                              Annual Growth Rate
                                                              ------------------
   <S>                                                        <C>
   Revenue:
     Time Warner.............................................        10.1%
     America Online..........................................        26.2%
     Pro forma...............................................        13.0%
<CAPTION>
                                                               Estimated 1999-
                                                                2001 Compound
                                                              Annual Growth Rate
                                                              ------------------
   <S>                                                        <C>
   EBITDA:
     Time Warner.............................................        12.5%
     America Online..........................................        61.0%
     Pro forma...............................................        20.1%
</TABLE>

 
   Premiums Paid in Selected Precedent Transactions Analysis.  Morgan Stanley
reviewed nine recent selected business combinations structured as mergers of
equals and analyzed the premiums/discounts paid in these transactions over
prevailing market prices before the announcement of these transactions. Morgan
Stanley selected these transactions because they were structured as mergers of
equals of large publicly-traded corporations and not because they involved
companies engaged in industries that would be similar or related to those in
which Time Warner or America Online operate.
 
   These transactions are: the Viacom, Inc./CBS Corporation transaction, the
Vodafone PLC/AirTouch Communications, Inc. transaction, the British Petroleum
Company/Amoco Corporation transaction, the Bell Atlantic Corporation/GTE
Corporation transaction, the Norwest Corporation/Wells Fargo & Company
transaction, the SBC Communications Inc./Ameritech Corporation transaction, the
Daimler-Benz Aktiengesellschaft/Chrysler Corporation transaction, the
NationsBank Corporation/Bank of America Corporation transaction and the
Travelers Group Inc./Citicorp transaction.
 
   The table below provides the high and low premiums/discounts at 30 days and
at one day before the announcement of these transactions, compared with the 71%
premium to be received by the shareholders of Time Warner in the merger, based
on the trading price for the America Online and Time Warner common stock as of
January 7, 2000:

<TABLE>
<CAPTION>
                                           Premium/(Discount) Premium/(Discount)
                                           to Stock Price at  to Stock Price at
                                                30 Days            One Day
                                           ------------------ ------------------
   <S>                                     <C>                <C>
   Selected transactions:
     High.................................        72.1 %             70.4 %
     Low..................................        (4.5)%             (1.5)%
</TABLE>

 
   No company or transaction utilized in the peer group comparison analysis is
identical to Time Warner or America Online or the merger. In evaluating the
peer groups, Morgan Stanley made judgments and assumptions with regard to
industry performance, general business, economic, market and financial
conditions and other matters, many of which are beyond the control of Time
Warner or America Online, such as the impact of competition on the business of
Time Warner, America Online, or the industry generally, industry growth and
 
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