* Dutch auction tender offer of $400 mln
* Includes $40 million of stock repurchase program
* AOL is considering other payouts, including dividends
June 28 (Reuters) - AOL Inc is taking its first step to returning to shareholders the proceeds of its patent sale to Microsoft, with a Dutch auction tender offer to repurchase $400 million in stock.
Under the terms of the offer, which starts on July 28 and ends on Aug. 2, AOL shareholders will have the opportunity to tender their shares at a price within the range of $27 to $30 per share.
Shares of AOL were trading up slightly 30 cents at $27.61 in afternoon trade on the New York Stock Exchange.
The auction is one way that AOL plans to return to its stakeholders a little more than $1 billion from the patent sale.
AOL said its preferred method to return 100 percent of the proceeds was a stock repurchase program, but due to the size of the buyback, it would trip a change of control, which would affect its tax status.
The company said it is considering several other options, including privately negotiated transactions and a dividend.
It intends to return all of the proceeds from the patent sale by the end of 2012.
The Dutch auction also includes about $40 million remaining from an initial $250 million stock repurchase program authorized in August 2011.