AOL Inc. (AOL) to be Acquired by Verizon in $4.4B Deal

Shares of AOL Inc. (AOL) were trading up +7.59 or +17.82 percent to $50.18 in Tuesday's premarket, after news early this morning that the company had signed an agreement for its purchase by Verizon Communications Inc. (VZ) for $50 per share. AOL Inc. stock closed at $42.59, down -0.83 or -1.91 percent in Monday's regular trading session.

New York City, New York based AOL Inc. was originally founded as Control Video Corporation in 1983, changing its name to America Online in 1991, until 2009 when it changed its name to AOL.
The company's main business is in the development and growth of Internet web sites, digital distribution of products and services, as well as Internet content, which it sells to customers, publishers and advertisers. The company was acquired by Time Warner TWC in early 2000 for $125 billion and soon after began losing subscribers to faster connections provided by telephone and cable TV carriers. AOL was subsequently spun off from Time Warner in December of 2009.

New York based Verizon Communications Inc. is a world leader in providing broadband and wireless communications services to wholesale customers, governments, consumers and businesses. The company operates the largest wireless network in the United States with 108.6 million retail connections. Verizon also offers entertainment and information services through its state-of-the-art fiber optic network. The company had revenue of over $127 billion last year and employs more than 176,000 people.

The acquisition announced early this morning, will have Verizon pay $50 per share in cash for all outstanding AOL shares, which represents a premium of +23 percent over the stock's volume weighted average price over the last three months. The total value of the transaction for the purchase of AOL will be approximately $4.4 billion. AOL's Chief Executive Officer, Tim Armstrong will continue heading the division

In this morning's press release, Verizon's chairman and Chief Executive, Lowell McAdam, said that, "Verizon's vision is to provide customers with a premium digital experience based on a global multiscreen network platform. This acquisition supports our strategy to provide a cross-screen connection for consumers, creators and advertisers to deliver that premium customer experience.

He continued saying, "AOL has once again become a digital trailblazer, and we are excited at the prospect of charting a new course together in the digitally connected world. At Verizon, we've been strategically investing in emerging technology, including Verizon Digital Media Services and OTT that taps into the market shift to digital content and advertising. AOL's advertising model aligns with this approach, and the advertising platform provides a key tool for us to develop future revenue streams.

The acquisition will give Verizon access to AOL's digital content and advertising platforms, which combined with Verizon's existing wireless network, will create a mobile first platform that will offer directed targeting of products in what is estimated to be a $600 billion advertising industry. In addition to AOL's subscription business, the sale will include the company's portfolio of content brands with well known Internet sites such as TechCrunch, The Huffington Post and Engadget, as well as OTT, which produces original video content.

AOL stock is already trading over the $50 per share bid price, indicating shareholders are on board with the takeover, while Verizon stock is trading fractionally lower, at $49.44 per share.

Other News About AOL

AOL CEO: Assume open platform approach

Tim Armstrong, discusses AOL's future strategy following the acquisition.
AOL's Multi-Platform User Growth Fastest among the Top 5 Internet Properties

On May 8th, AOL released its first quarter 2015 results, which showed its consumer base grew significantly.

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Published on May 12, 2015
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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