Advertising.com, a unit of Time Warner Inc. (NYSE: TWX), looks like it has scored in the online video content deal with General Electric's (NYSE: GE) NBC Universal and News Corp.'s (NYSE: NWS) video venture launching this summer. Its Advertising.com unit will be the ad competitor to Google Inc.'s (NASDAQ: GOOG) YouTube.

It is almost ironic since AOL search is powered by Google and since Google took a 5% stake in AOL for $1billion in late 2005. Advertising.com will manage display and video advertising for the new site and will manage ads inserted into an embedded media player to be used by distribution partners. The venture is sill quietly dubbed "NewCo2.0" as there is not an official name.

You have to wonder just how much TradeDoubler is missing out on now after a few influential shareholders quashed the Time Warner bid.

MAJOR PAPERS:

• The Wall Street Journal reported that Wal-Mart Stores Inc (NYSE: WMT) has renegotiated the terms of leases with a number of banks, giving the retailer the ability to offer mortgages, home-equity lines of credit and consumer loans.
• According to the Financial Times, Lehman Brothers Holdings Inc (NYSE: LEH) is attempting to reassure investors about its exposure to the upheaval in the subprime mortgage market, saying activity from the sector accounted for an average of less than 3% of revenues over the past six quarters.
• Time Warner Inc's (NYSE: TWX) AOL internet division has withdrawn its $900M offer for Swedish internet advertising group TradeDoubler after a decision not to increase the value of the bid, the Financial Times reported.

OTHER PAPERS:

• The Associated Press reported that the U.S. government is expected to soon award its largest telecommunications contract ever to at least two bidders. The bidders, looking to be awarded the 10-year contract worth up to $48B, are Qwest Communications International Inc (NYSE: Q), Sprint Nextel Corporation (NYSE: S), AT&T Inc (NYSE: T) and Verizon Communications Inc (NYSE: VZ).
• The U.K. Times reported that private equity firms are eyeing Cadbury Schweppes ADS's (NYSE: CSG) Beverages business.
• Airline leasing company AerCap Holdings (NYSE: AER) was mentioned positively in Investor's Business Daily's "The New America" column. In 1990, 18% of commercial jets worldwide were leased. In 2005 that percent was 30, and it could reach 40% to 50%, says Wachovia analyst Gary Liebowitz.

Tomorrow will mark the expiration (March 14) of the buyout offer for Tradedoubler by Time Warner's (NYSE:TWX) AOL. As a reminder, AOL had offered 215 Swedish Kroners per share and it had been approved by the board of Tradedoubler, but a band of large shareholders vowed to fight the bid as inadequate.

This morning Reuters noted that AFA Insurance does not intend to tender its shares. This is after the Alecta and AMF Pension have rejected the offer, and AOL has nowhere near enough votes to acquire the company. What is interesting is that AOL just announced an online ad pact with Gannett's PointRoll unit for media-rich online advertising. By now AOL has probably learned the nuts and bolts of Tradedoubler's business. It also probably doesn't need or want the tax burdens of dealing in Sweden (if you have lived in Scandinavia you will understand).

AOL has telegraphed on numerous times that the company will not increase its offer. So AOL will be able to look for other partners in the sector AND it won't have to spend $900 million for the company. Tradedoubler might have been a great add-on for AOL in content ad management in Europe, but for $900 million Time Warner may be thinking "good riddance." This would have also been expensive since TradeDoubler's valuations are compared as "higher than Google" by European traders.

This was a strange deal because it required a 90% approval to proceed. Most of us can't even reach a 90% consensus in a one-person vote, quite a paradox.

Jon Ogg is a partner in 24/7 Wall St., LLC; he does not own securities in the companies he covers.

AOL, a unit of Time Warner Inc. (NYSE: TWX), has extended its $900 million buyout offer in cash to TradeDoubler, the Swedish online ad firm. The company has already said it will not raise the offer after the merger was approved by TradeDoubler's board of directors in Sweden and then botched by large dissenting shareholders.

Relevant competitive and regulatory acceptances have been made, but the largest holders are still holding out for more money. The merger does not have the necessary votes to win a full approval, so AOL will have to decide if it will offer more funds or walk away. Just how much is a Swedish online ad firm worth? Apparently, more than $900 million.

AOL is extending the acceptance period to March 14, 2007 (from Feb. 28 deadline) in order to provide holders of TradeDoubler shares and warrants that have not yet tendered their securities with the opportunity. The company indicates in its press release that the conditions have been fulfilled or waived on March 19, 2007, settlement is expected to commence on or about March 21, 2007.

The formal offer from AOL was for 215 Swedish Kroners in local currency, yet shares are currently trading at 227 Swedish Kroners on the Stockholm Stock Exchange. Its 52-week trading range is 110 to 235 SK. What is interesting is that the stock had already run up more than 100% into the buyout offer and at the time the buyout would have been at record price levels.

Time Warner Inc.'s (NYSE:TWX) AOL announced a cash offer for TradeDoubler, a Swedish online ad marketing and placement firm. But while the board had negotiated and approved a deal, it was forcefully rejected by TradeDoubler's larger shareholders.

The formal offer was for SEK 215 per share in Stockholm. The total value of the proposed transaction was about $900 million if you fully dilute the value with warrants outstanding. Nordea Funds, AMF Pension, and Alecta, which are larger shareholders in TradeDoubler, believe the bid is too low.

What is a bit odd is that the deal was negotiated and was recommended by the TradeDoubler board and got the backing of shareholders with around 20% of the stock. But the bid needs 90% approval. Even if every other holder approves the deal, this won't occur at current prices. AMF (with a 5.1% stake) and Alecta (with a more than 10% stake) can block it.

This acquisition would have added in a solid marketing and ad niche to the portal and content businesses that AOL retained as part of the AOL Europe unit sales in Germany, France, and the United Kingdom.

TradeDoubler trades in Stockholm, Sweden under the local ticker of "TRAD" and shares are up 15% from the pre-offer levels and are higher than the implied offer price. So now you know the stock is in play and a perceived floor is apparent.

What is hard to know now is if AOL will go back to negotiate with the larger holders or if it will walk away. A deal would add value to AOL's Advertising.com. Now the question will be if it adds value at $1 billion or more instead of the $900 million. In its piece this morning, the Wall Street Journal (subscription required) said that Time Warner isn't planning any hikes to its offer.