Subscribe

Verizon's $4.4 billion deal for AOL sends AOL stock on a tear

Verizon buying AOL gives the biggest US wireless carrier access to AOL's successful digital advertising service and content including the Huffington Post news website. 

  • close
    The Verizon studio booth at MetLife Stadium, in East Rutherford, N.J. Verizon Communications Inc. is buying AOL Inc. for about $4.4 billion, advancing the telecom’s push in both mobile and advertising fields, the company announced, Tuesday, May 12, 2015.
    Mel Evans/AP/File
    View Caption
  • About video ads
    View Caption
of

Verizon Communications Inc said it would buy AOL Inc in a $4.4 billion deal that gives the biggest U.S. wireless carrier access to AOL's successful digital advertising service and content including the Huffington Post news website.

The offer of $50 per share represents a premium of 17.4 percent to AOL's Monday close of $42.59.

AOL shares traded as high as $50.70 before the opening bell on Tuesday. Verizon shares were down about 1 percent at $49.32.

The deal, which includes about $300 million of AOL debt, will take the form of a tender offer followed by a merger, with AOL becoming a wholly owned subsidiary of Verizon.

Verizon said it expects to fund the transaction from cash on hand and debt.

"Verizon's vision is to provide customers with a premium digital experience based on a global multiscreen network platform," said chairman and CEO Lowell McAdam in a printed statement.

Tim Armstrong, who has spearheaded AOL's transformation into one of the most successful advertising technology companies, will continue to lead the company after the sale.

"When you look at where we are today and where we are going, we have made AOL as big as it can possibly be in today's landscape," Armstrong told CNBC.

"..There is no better partner for us to go forward with than Verizon," he said.

Activist-investor Starboard Value LP had urged Yahoo Inc to consider a merger with AOL, whose businesses include the TechCrunch blog.

AOL reported a 7.2 percent rise in first-quarter revenue to $625.1 million, boosted by demand for its real-time bidding platform that helps advertisers place video and display ads on other digital properties.

AOL was a technology behemoth in 2000 when it bought Time Warner for more than $160 billion. That deal became a disaster and AOL was spun off from Time Warner in 2009 and was listed on the New York Stock Exchange at a value of $3.4 billion.

Verizon has been spending aggressively to expand its business. In February it bought licenses worth $10.4 billion in a government sale of wireless airwaves for mobile data.

LionTree Advisors, Weil Gotshal & Manges and Guggenheim Partners advised Verizon.

AOL's advisers were Allen & Co LLC and Wachtell Lipton Rosen & Katz.

Up to Monday's close, AOL's shares had gained 12 percent and Verizon's 3.4 percent in the past 12 months. 

About these ads
Sponsored Content by LockerDome
 
 
Make a Difference
Inspired? Here are some ways to make a difference on this issue.
FREE Newsletters
Get the Monitor stories you care about delivered to your inbox.
 

We want to hear, did we miss an angle we should have covered? Should we come back to this topic? Or just give us a rating for this story. We want to hear from you.

Loading...

Loading...

Loading...

Save for later

Save
Cancel

Saved ( of items)

This item has been saved to read later from any device.
Access saved items through your user name at the top of the page.

View Saved Items

OK

Failed to save

You reached the limit of 20 saved items.
Please visit following link to manage you saved items.

View Saved Items

OK

Failed to save

You have already saved this item.

View Saved Items

OK