Verizon Communications (NYSE: VZ) said it will purchase AOL for $50 per share, or approximately $4.4 billion. The acquisition will give Verizon a jump-start in the online advertising and video market by giving the telecom heavyweight access to AOL's technology and video content.
The all-cash deal is expected to close this summer, pending regulatory approval. AOL CEO Tim Armstrong will remain with the company and AOL will become a wholly owned subsidiary of Verizon.
Verizon executives have talked about their intentions to launch a mobile and online video offering this summer; the company's AOL deal will likely support that effort. Verizon also said its purchase of AOL will propel its Internet of Things strategy.
In addition, the combination of Verizon and AOL will give Verizon access to AOL's advertising platform to create a "scaled, mobile-first platform offering directly targeted at what eMarketer estimates is a nearly $600 billion global advertising industry," the companies said.
Verizon Chairman and CEO Lowell McAdam said in a release that Verizon has been strategically investing in emerging technology, including Verizon Digital Media Services, 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," he said.
In January 2014, Verizon purchased Intel's over-the-top video product OnCue. At the time the company said it would use the product to advance its online and mobile video efforts.
Verizon has also dabbled in streaming video with its now-shuttered Redbox partnership. The companies teamed up in 2012 for the Redbox Instant streaming service, but shut down the operation in 2014.
- see this WSJ article (sub. req.)
- see this FierceOnlineVideo article
- see this press release
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