Bertelsmann, AOL Agree to Partner, Future Sale

LONDON (03/17/2000) - The German publishing giant, Bertelsmann AG and America Online Inc. (AOL) have agreed to a four-year strategic alliance valued at US$250 million, the companies announced today.

Furthermore, Bertelsmann and AOL have also put in place mechanisms for a possible future sale of Bertelsmann's stakes in AOL Europe GmbH and AOL Australia to AOL for between $6.75 billion to $8.25 billion, the companies said in a statement.

The sale would be made after January 31, 2002, AOL and Bertelsmann said.

Under the terms of the alliance, Bertelsmann will provide AOL with media content and e-commerce for worldwide distribution over AOL's various channels.

Specifically, Bertelsmann's e-commerce content will be distributed over AOL, CompuServe and Netscape Online interactive services, AOL Instant Messenger, ICQ, AOL.COM, Digital City, Spinner and Winamp, AOL and Bertelsmann said in the statement.

The agreement allows AOL to strengthen its working relationship with the local management teams at AOL Europe, the companies said. Bertelsmann will in turn term AOL, CompuServe and Netscape Online as its "Preferred Interactive Services," AOL and Bertelsmann said.

AOL Europe's current President and Chief Executive Officer Andreas Schmidt will make way for Michael Lynton, the President of AOL International, who is to become acting CEO of AOL Europe, AOL and Bertelsmann said. After a transition period, Schmidt will return to Bertelsmann, the companies said.

The possible sale of Bertelsmann's stake in AOL Europe has not been unexpected.

In January, Bertelsmann chief Thomas Middelhoff resigned from AOL's board of directors after AOL and Time Warner announced their merger. [See "Bertelsmann's Middelhoff Resigns AOL Board Seat," Jan. 26.]Bertelsmann at one time had a share of around 5 percent in AOL, but has reduced that more recently to less than 1 percent.

Bertelsmann will use any profits resulting from the agreement to expand its e-commerce business, AOL and Bertelsmann said.

Bertelsmann, based in Gütersloh, Germany, can be reached at +49-5241-80-0 or at AOL Europe, in Hamburg, Germany, can be reached at +49 403 61 590, or at AOL, in Dulles, Virginia, is at +1-703-448-8700, or at

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