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.
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.
Other Stocks in the News
Can Tesla's Battery Hit $1 Billion Faster Than the iPhone Did?
Reservations for the battery in the first week were valued at about $800 million.
Opinion: Yelp takeover talk discounts Google, Yahoo interest
Ironfire Capital discounted Yahoo and Google as potential suitors for Yelp.