Verizon to acquire AOL in a $4.4 billion deal

Verizon to acquire AOL in a $4.4 billion deal

Verizon Communications has agreed to acquire AOL in a $4.4 billion deal in a push to advance its ambitions in mobile video advertising.

The all-cash acquisition, which values AOL at $50 a share, will help Verizon build its digital and video platforms.

Verizon will gain AOL’s key assets which include its subscription business; global content brands, such as The Huffington Post, TechCrunch, Engadget, Makers and, as well as its OTT, original video content; and its programmatic advertising platforms.

The combined entity will create a scaled, mobile-first platform offering targeted at a nearly $600 billion global advertising industry, said Verizon.

The company said the deal will strengthen its mobile and OTT video strategies. “This acquisition supports our strategy to provide a cross-screen connection for consumers, creators and advertisers to deliver that premium customer experience,” said Lowell McAdam, chairman and CEO of Verizon.

“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.”

AOL’S CEO Tim Armstrong will continue to lead AOL’s operations upon completion of the deal.

“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,” Armstrong said.

The acquisition comes before the launch of Verizon’s video streaming service later this year. In January 2014, the company purchased Intel’s OnCue internet video service, an asset which is expected to serve as the underpinning for its video streaming service.

With the US mobile industry becoming increasingly competitive and saturated, mobile video streaming service will be a revenue source and differentiator for Verizon as it seeks to compete with rivals such as T-Mobile.

The transaction will take the form of a tender offer followed by a merger, with AOL becoming a wholly-owned subsidiary of Verizon when the deal is completed.

Pending customary regulatory approvals and closing conditions, the deal is expected to be completed by the end of the summer.