Time Warner's (TWX) board is expected today to approve AOL becoming an independent company, The Wall Street Journal is reporting, according to the people familiar with the matter.
The separation would come about a decade after the merger was announced, just two months before the Nasdaq Composite traded to a record-high, above 5,000.
On January 10, 2000, Dulles, Virginia-based America Online said it planned to buy New York-based Time Warner for $112.1 billion. After the merger, the company changed its name to AOL Time Warner and former AOL CEO Steve Case helped lead what was supposed to become the media company of the future.
Instead, the company's growth stalled and its stock fell to one-tenth of its value at the time of the announced merger. The Nasdaq traded below 1,500 in 2002 as technology and other stocks tumbled and the tech bubble burst. On Wednesday, the Nasdaq closed at 1,731.
Time Warner chief Jeff Bewkes has made it clear this year that the Internet unit would not be a focus for his company. He has already spun off Time Warner Cable (TWC).
AOL hired former Google (GOOG) advertising executive Tim Armstrong as its CEO in March, a move that was viewed as a precursor to a likely separation of AOL from Time Warner.
The structure, details and valuation of AOL haven't been finalized, the Journal said, although AOL is likely to remain in one piece, keeping its web sites, which includes DailyFinance, and Internet access customers together.
UPDATE: Time Warner made it official, announcing the separation:
"We believe that a separation will be the best outcome for both Time Warner and AOL. The separation will be another critical step in the reshaping of Time Warner that we started at the beginning of last year, enabling us to focus to an even greater degree on our core content businesses," Bewkes said in a press release today.
Anthony Massucci is a senior writer for DailyFinance. You may follow him on Twitter at hianthony.