The veteran corporate raider Carl Icahn kept up the pressure on Time Warner yesterday, dubbing the company's plans to sell a 5% stake in its internet business AOL to Google a "disastrous decision".
Mr Icahn made his views known in an open letter to Time Warner's board after reports of an imminent deal with Google.
According to the US media, Google will invest $1bn (£570m) in AOL in return for the stake. The deal was apparently struck on Thursday after months of high-level talks that set Google and Microsoft against each other. The Time Warner board is expected to ratify the agreement later today.
Mr Icahn controls about 3% of Time Warner and has waged a public and increasingly abusive campaign against the board. The billionaire has argued for the complete spin-off of the Time Warner Cable network business and had some success in pressing the firm to increase a planned share buyback. He has promised to stage a proxy fight at Time Warner's annual meeting by nominating directors.
Mr Icahn called the deal with Google "shortsighted" and said it "may preclude any consideration of a broader set of alternatives that would better maximise value and ensure a bright future for AOL".
After years of being a drag on Time Warner, AOL is once again being seen as a potential engine for growth. As subscriptions to its dial-up service decline, Time Warner has been reshaping the business as a free internet portal, along the lines of MSN or Yahoo!, to capitalise on the rapid growth of online advertising.
AOL's decision to link-up with Google instead of Microsoft underscores how potent a force the upstart has become. Equally, it is a big blow for Microsoft, which has struggled to catch Google and Yahoo! in the lucrative search market.
Under the deal, Google will continue to provide internet search for AOL. In a first for Google, it will give advertisements for AOL special prominence on its site - potentially a huge driver of traffic for AOL.
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