SEC Filings

S-4/A
TIME WARNER INC. filed this Form S-4/A on 03/24/2000
Entire Document
 
<PAGE>
 
   (iii)  discussed with senior executives of America Online and Time Warner
          certain strategic, financial and operational benefits they
          anticipate from the Mergers;
 
    (iv)  reviewed the reported prices and trading activity for Time Warner
          Common Stock and America Online Common Stock;
 
     (v)  compared the financial performance of America Online and Time
          Warner and the prices and trading activity of America Online Common
          Stock and Time Warner Common Stock with those of certain other
          comparable publicly-traded companies and their securities;
 
    (vi)  reviewed the financial terms, to the extent publicly available, of
          certain precedent transactions we deemed relevant;
 
   (vii)  participated in certain discussions and negotiations among
          representatives of America Online and Time Warner and their
          financial and legal advisors;
 
  (viii)  reviewed the Merger Agreement, the Voting Agreement to be entered
          into between America Online and certain shareholders of Time Warner
          substantially in the form of the draft dated as of January 9, 2000
          reviewed by us (the "Voting Agreement") and the Stock Option
          Agreements to be entered into between America Online and Time
          Warner each substantially in the form of the drafts dated January
          9, 2000 reviewed by us (the "Stock Option Agreements") and certain
          related documents; and
 
    (ix)  performed such other analyses and considered such other factors as
          we have deemed appropriate.
 
   We have assumed and relied upon without independent verification the
accuracy and completeness of the information reviewed by us for the purposes of
this opinion. We did not receive financial forecasts for Time Warner or America
Online and have instead relied on the publicly available estimates of certain
analysts, including those at Morgan Stanley & Co. Incorporated, ("Morgan
Stanley"), who report on America Online and Time Warner. With respect to the
anticipated strategic, financial and operational benefits of the Mergers,
including assumptions regarding America Online's and Time Warner's existing and
future products and technologies, we have assumed that the information provided
has been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the future financial and operational performance of
America Online and Time Warner, respectively. We have not made and have not
assumed responsibility for making any independent valuation or appraisal of the
assets or liabilities of America Online or Time Warner, nor have we been
furnished with any such appraisals. We have assumed that the executed versions
of the Merger Agreement, Voting Agreement and Stock Option Agreements will not
differ in any material respect from the last drafts thereof we have reviewed.
We have assumed that the Mergers will be consummated in accordance with the
terms set forth in the Merger Agreement without material modification or waiver
and that the Mergers will be tax-free reorganizations or exchanges under the
Internal Revenue Code of 1986, as amended. Our opinion is necessarily based on
financial, economic, market and other conditions as in effect on, the
information made available to us as of, and the financial condition of America
Online and Time Warner on, the date hereof.
 
   We have acted as financial advisor to the Board of Directors of Time Warner
in connection with this transaction and will receive a fee for our services, a
significant portion of which is contingent on the consummation of the Mergers.
In the past, Morgan Stanley and its affiliates have provided financial advisory
and financing services for America Online and Time Warner and have received
fees for the rendering of these services. In the ordinary course of business,
Morgan Stanley may from time to time trade in the securities or indebtedness of
America Online and Time Warner for its own account, the accounts of investment
funds and other clients under the management of Morgan Stanley and for the
accounts of its customers and, accordingly, may at any time hold a long or
short position in such securities or indebtedness.
 
   It is understood that this letter is for the information of the Board of
Directors of Time Warner and may not be used for any purpose without our prior
written consent, except that this opinion may be included in its
 
                                      F-2