Verizon Is Buying AOL For $4.4 Billion


Telecommunications giant Verizon said on Tuesday that it has agreed to buy AOL for $4.4 billion, in a move expected to help drive its advertising and video strategies.

AOL CEO Tim Armstrong, who has led the company since 2009, will remain at the helm upon closing.

Shares of AOL surged 18% on the news while shares of Verizon were largely flat.

Verizon said it will pay $50 per share for the company, a 17% premium over yesterday’s closing price, in a deal valued at roughly $4.4 billion.

The acquisition is expected to help drive Verizon’s video strategy. Verizon, which recently said it would offer slimmer cable packages as the unbundling wars heat up, is planning to launch an online video service this summer. AOL owns online news sites like The Huffington Post, TechCrunch and Engadget and has produced Emmy-nominated video content that Verizon describes as geared toward millennials.

Verizon also plans to leverage AOL’s programmatic advertising platforms to display ads across devices.

“At Verizon, we’ve been strategically investing in emerging technology…that taps into the market shift to digital content and advertising,” said Verizon CEO Lowell McAdam. “AOL’s advertising model aligns with this approach, and the advertising platform provides a key tool for us to develop future revenue streams.”

In recent years, Tim Armstrong has helped move a company that started as one of the first dial-up internet providers into the digital age. The company, which relocated from Virginia to New York City, has picked up several digital media brands and invested in advertising technology. In 2013, it bought Adap.tv, a platform that connects buyers and sellers of online video advertising.

“The visions of Verizon and AOL are shared; the companies have existing successful partnerships, and we are excited to work with the team at Verizon to create the next generation of media through mobile and video,” said Armstrong in a statement.

In an email sent to partners, obtained by Forbes contributor Steven Rosenbaum, Armstrong said:

Over the last 5 years, we have returned AOL to growth and outperformed the market (+150% since spin) by investing in the future of content, video and programmatic platforms. We now have the opportunity to turn our efforts and assets to a broader market with an exponentially larger opportunity through the combination of Verizon and AOL, which will create the company best positioned for the next generation of mobile and video.

Right out of the gate, here’s what we will soon be able to bring to you:

Massive global scale in addressable cross-screen audience (over 1.5B PCs, TVs and mobile devices touching 70% of U.S. Internet traffic)
Access to a larger premium, mobile and video-led content library
Deeper content marketing solutions
Accelerated investment in programmatic products and features
Increased monetization opportunities

Thanks as always for your continued partnership and support.

Best,
Tim Armstrong

The deal, which is subject to regulatory approval, is expected to close this summer. AOL will become a wholly owned subsidiary of Verizon once the deal is completed.

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