Google will pay 1 billion U.S. dollars for a 5-percent stake in Time Warner's America Online (AOL) as part of a major strategic alliance, the companies announced Tuesday.

The agreement will create a global online advertising partnership and make more of the AOL's content available to Google users, the firms said.

Time Warner chief executive Dick Parsons said the alliance is the right choice for his media group.

"We're very pleased to build significantly on our special relationship with Google in a way that will meaningfully strengthen the AOL's position in the fast-growing online advertising business and help drive more advertisers to its Web properties," Parsons said in a statement.

AOL chief executive Jonathan Miller said they were excited about working with Google on the next generation of their products and further expanding their presence on the Internet.

Meanwhile, Google chief executive Eric Schmidt said they were also thrilled to promote the relationship with the AOL which is one of Google's longest-standing partners.

"Today's agreement leverages technologies from both companies to connect Google users worldwide to a wealth of new content," he said.

The companies said they would explore giving an international reach to the AOL Marketplace, a popular classified ads section of the AOL's U.S. portal.

They will also expand display advertising throughout the Google network, make the AOL content more accessible to Google users, collaborate in a video search engine, and make the Google and AOL instant messaging services compatible.

Source: Xinhua