If he can, Icahn

8 February 2006 By Rob Cox Follow @rob1cox

The billionaire, with Lazard, urged shareholders to support a breakup into four companies. But reaction was understandably muted. Engineering won t magically lift Time Warner s value. Still, the group’s case for maintaining its conglomerate structure isn’t convincing.

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Carl Icahn, the billionaire investor, unveiled a plan prepared by Lazard for a breakup of Time Warner into four separate companies. The plan calls for Time Warner to split up into its component parts: internet firm AOL, publishing, cable and a rump that includes its networks and film studio. It also calls for a $20bn Dutch auction buyback of stock.

Based on Lazard's estimates, this would boost the value of the group to a range from $23.30 to $26.57 from about $18 today. The full 343page report is available at a website www.enhancetimewarner.com.

At the top range of Lazard's sumoftheparts estimate, AOL's enterprise value is pegged at $21bn; publishing at $14.2bn; cable at $49bn and the networks unit at $61bn. On this basis, the total enterprise value of the group would be some $145bn.

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