SEC Filings

S-4/A
TIME WARNER INC. filed this Form S-4/A on 03/24/2000
Entire Document
 
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                                    ANNEX F
 
               [LETTERHEAD OF MORGAN STANLEY & CO. INCORPORATED]
 
                                          January 9, 2000
 
Board of Directors
Time Warner Inc.
75 Rockefeller Plaza
New York, NY 10019
 
Members of the Board:
 
   We understand that Time Warner Inc. ("Time Warner" or the "Company") and
America Online, Inc. ("America Online") will enter, into an Agreement and Plan
of Merger substantially in the form of the draft dated as of January 9, 2000
reviewed by us (the "Merger Agreement") which provides, among other things, for
(i) the creation of a new holding company ("Holdco") which will have two
subsidiaries, Time Warner Merger Corp. ("Time Warner Merger Sub") and America
Online Merger Corp. ("America Online Merger Sub"), (ii) the merger (the "Time
Warner Merger") of Time Warner Merger Sub with and into Time Warner whereby
each issued and outstanding share of common stock, par value $0.01 per share,
of Time Warner Merger Sub shall be converted into one fully paid and non-
assessable share of common stock, par value $0.01 per share of the surviving
corporation in the Time Warner Merger, and (iii) the merger (the "America
Online Merger", and together with the Time Warner Merger, the "Mergers") of
America Online Merger Sub with and into America Online whereby each issued and
outstanding share of common stock, par value $0.01 per share, of America Online
Merger Sub shall be converted into one fully paid and non-assessable share of
common stock, par value $0.01 per share of the surviving corporation in the
America Online Merger. Pursuant to the Time Warner Merger, among other things,
(i) each issued and outstanding share of common stock, par value $0.01 per
share ("Time Warner Common Stock"), of Time Warner will be converted into the
right to receive 1.5 shares of common stock, par value $0.01 per share ("Holdco
Common Stock") of Holdco, (ii) each issued and outstanding share of Series
LMCN-V Common Stock, par value $0.01 per share (the "Time Warner Series LMCN-V
Common Stock"), of Time Warner will be converted into the right to receive 1.5
shares of Series LMCN-V Common Stock, par value $0.01 per share, of Holdco, and
(iii) each issued and outstanding share of Series LMC Common Stock, par value
$0.01 per share (the "Time Warner Series LMC Common Stock", and together with
the Time Warner Series LMCN-V Common Stock, the "Time Warner Series Stock") of
Time Warner will be converted into the right to receive 1.5 shares of Series
LMC Common Stock, par value $0.01 per share, of Holdco, each at the effective
time of the Time Warner Merger. The exchange ratio of 1.5 for each of the Time
Warner Common Stock and Time Warner Series Stock is referred to as the
"Exchange Ratio". Pursuant to the America Online Merger, each issued and
outstanding share of common stock, par value $0.01 per share ("America Online
Common Stock") of America Online will be converted into the right to receive
one share of Holdco Common Stock. The terms and conditions of the Mergers are
more fully set forth in the Merger Agreement.
 
   You have asked for our opinion as to whether the Exchange Ratio is fair from
a financial point of view to the holders of Time Warner Common Stock and Time
Warner Series LMCN-V Stock.
 
   For purposes of the opinion set forth herein, we have:
 
   (i)  reviewed certain publicly available financial statements and other
        information of America Online and Time Warner respectively;
 
  (ii)  discussed the past and current operations and financial condition and
        the prospects of America Online and Time Warner with senior
        executives of America Online and Time Warner, respectively;
 
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