Verizon will acquire AOL for $US4.4 billion, or $US50 per share.
That’s a 17% premium over AOL’s Monday closing price of $US42.59.
“Verizon’s vision is to provide customers with a premium digital experience based on a global multiscreen network platform,” Verizon CEO Lowell McAdam said. “This acquisition supports our strategy to provide a cross-screen connection for consumers, creators and advertisers to deliver that premium customer experience.”
AOL’s brands include, The Huffington Post, TechCrunch, and Engadget.
“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,” AOL CEO Tim Armstrong said.
According to the press release, Armstrong will continue to run AOL operations after the deal closes. According to a Feb. 13 regulatory filing, he holds 1.48 million shares of AOL or 1.9% of the company.
“I’ll be there for a long period of time,” Armstrong told CNBC early Tuesday.
Verizon expects to finance the deal with cash and short-term debt. Management expects the deal to close this summer.
Here’s the full text of Verizon’s announcement:
Verizon to Acquire AOL
Deal Creates Unique and Scaled Digital Media Platforms for Consumers, Advertisers and Partners
NEW YORK — Taking another significant step in building digital and video platforms to drive future growth, Verizon Communications Inc. (NYSE, Nasdaq: VZ) today announced the signing of an agreement to purchase AOL Inc. (NYSE: AOL) for $US50 per share — an estimated total value of approximately $US4.4 billion.
Verizon’s acquisition further drives its LTE wireless video and OTT (over-the-top video) strategy. 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 is a leader in the digital content and advertising platforms space, and the combination of Verizon and AOL creates a scaled, mobile-first platform offering directly targeted at what eMarketer estimates is a nearly $US600 billion global advertising industry. AOL’s key assets include its subscription business; its premium portfolio of global content brands, including The Huffington Post, TechCrunch, Engadget, MAKERS and AOL.com, as well as its millennial-focused OTT, Emmy-nominated original video content; and its programmatic advertising platforms.
Lowell McAdam, Verizon chairman and CEO, said: “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 added, “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.”
Tim Armstrong, AOL chairman and CEO, will continue to lead AOL operations after closing.
Armstrong said, “Verizon is a leader in mobile and OTT connected platforms, and the combination of Verizon and AOL creates a unique and scaled mobile and OTT media platform for creators, consumers and advertisers. 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 transaction will take the form of a tender offer followed by a merger, with AOL becoming a wholly owned subsidiary of Verizon upon completion.
The transaction is subject to customary regulatory approvals and closing conditions and is expected to close this summer.
Verizon expects to fund the transaction from cash on hand and commercial paper. The company also continues to expect to return to pre-Vodafone transaction credit ratings in the 2018-2019 timeframe.
Transaction advisers for Verizon were LionTree Advisors; Guggenheim Partners; and Weil, Gotshal & Manges. AOL advisers were Allen & Company LLC and Wachtell, Lipton, Rosen & Katz.
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