Icahn Warns on Sale of AOL Stake to Google

Billionaire investor Carl Icahn said Monday that Time Warner Inc.’s plan to sell a 5% stake in its America Online for $1 billion to Google Inc. may prove to be “disastrous” by preventing more valuable deals.

“The real risk for Time Warner shareholders is that a Google joint venture may be shortsighted in nature and may preclude any consideration of a broader set of alternatives,” Icahn said in an e-mail copy of a letter sent to directors at New York-based Time Warner.

Time Warner shouldn’t enter a deal with Google that would keep AOL from merging or forming partnerships with companies such as Barry Diller’s IAC/InterActiveCorp, EBay Inc., Yahoo Inc. or Microsoft Corp., Icahn said.

Icahn, who with a group of investors owns 3% of Time Warner in stock and options, said Time Warner’s board “may be on the verge of making a disastrous decision.”

Chief Executive Richard Parsons last week chose Mountain View-based Google for an Internet-advertising venture with AOL, ending 11 months of talks with Microsoft.

Spokeswoman Kathy McKiernan said Time Warner wouldn’t comment on the letter.

Time Warner shares fell 5 cents to $17.95, while Google fell $5.55 to $424.60.