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Verizon buys AOL for $4.4 bln

Tuesday, May 12, 2015 - 01:58

The deal gives the U.S.' largest wireless carrier AOL's technology for selling ads and its trove of web video. Fred Katayama reports.

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AOL's got a deal. Verizon has agreed to buy it for $4.4 billion. The $50 a share offer is a 17 percent premium to AOL's closing price on Monday. The deal gives the U.S.' largest wireless carrier AOL's technology for selling ads and its trove of web video. Verizon has been developing an online video service that it hopes will boost data consumption on mobile devices. And it says it may rely largely on advertising for revenue from that service. Verizon CEO Lowell McAdam said, "(AOL's) advertising platform provides a key tool for us to develop future revenue streams." Wells Fargo senior analyst Jennifer Fritzsche sees a big difference between the strategies pursued by Verizon and AT&T. She said, "While AT&T believes there is a greater need to own more physical infrastructure (through DirecTV), Verizon is building up more assets to strengthen its 'mobile first' over-the-top initiative - with advertising playing a key role." Under CEO Tim Armstrong, AOL has transformed itself from a Time Warner spinoff known for dial-up Internet access into a company focused on video and mobile. Its content lineup ranges from news sites like the Huffington Post and TechCrunch to original video programming. He said in a CNBC interview that he's selling the company now because AOL had made itself -in his words - "as big as it could possibly be." AOL was once much bigger - it had bought media giant Time Warner in 2000 just before the Internet bubble burst in what's widely considered a big disaster. Today's deal is just a fraction of that $163 billion marriage. AOL's stock, which has outperformed the S&P 500 over the past year, rocketed higher at the open. The companies say they expect to close the deal this summer.

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Verizon buys AOL for $4.4 bln

Tuesday, May 12, 2015 - 01:58