Verizon to Buy AOL For $4.4 Billion

The all-cash deal deal would have AOL valued at $50 a share

Last Updated: May 12, 2015 @ 9:39 AM

Verizon Wireless is buying AOL Inc. for $4.4 billion, the companies announced Tuesday.

The all-cash deal put AOL’s value at $50 a share — the company’s shares rose 18 percent before the market opened to $50.27.

“Verizon’s acquisition further drives its LTE wireless video and OTT (over-the-top video) strategy,” the carrier said in a statement. “The agreement will also support and connect to Verizon’s IoT (Internet of Things) platforms, creating a growth platform from wireless to IoT for consumers and businesses.”

AOL CEO Tim Armstrong appeared on CNBC Tuesday, lauding the deal: “It’s really not about selling the company — it’s about setting up for the next five to 10 years,” he said. “I think we’re going to do a lot of meaningful things.”

Armstrong, who will remain with AOL after completion of the deal, said the acquisition builds on an already successful relationship: “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.”

The move indicates Verizon’s desire to assert itself more in the video and mobile space, which AOL, a popular Internet access and messaging platform in the 1990s, has been doing more of lately with original series like “Connected,” a reality show that debuted in March.

With the AOL acquisition, Verizon will seek to create a mobile video service. AOL gives it the advertising infrastructure to make that successful.

Verizon also gets Huffington Post, which AOL acquired in 2011 and has seen significant growth in video over the years with its live show HuffPost Live. AOL also has a very sophisticated mobile-advertising network and infrastructure, which has invented creative ways of selling ads and high-quality digital content.

Over 50 percent of Huffington Post’s traffic comes from mobile, so the acquisition by Verizon fits into the company’s model.

“Verizon’s vision is to provide customers with a premium digital experience based on a global multiscreen network platform,” Lowell McAdam, Verizon chairman and CEO, said. “This acquisition supports our strategy to provide a cross-screen connection for consumers, creators and advertisers to deliver that premium customer experience.”