Verizon Gobbles Up AOL for a Reported $4.4 Billion
North American media giant Verizon is buying AOL for about $4.4 billion, or $50 a share, the companies announced Tuesday.
The merger aims to create a major new player in the digital media business by fusing one of the biggest mobile network providers with a leading content producer.
Verizon’s strategy is to dominate a future in which all content from television to publications are streamed over the web.
With this purchase, Verizon is getting much more than the 90s dial-up web company that first introduced many Americans to the Internet.
These days AOL provides online video services, content and ads to 40,000 other publishers. It generates $600 million in advertising. They own news sites such as The Huffington Post, TechCrunch and Engadget.
AOL is also developing its own video programs aimed at smartphone and tablet users, some of which have as many as 15 million viewers, which is more than many well-known TV shows now attract.
AOL will become a separate business division within Verizon. Tim Armstrong, CEO of AOL will keep his role.
Armstrong told CNN’s Poppy Harlow that the combination looks to open new growth opportunities for both AOL and Verizon amid a huge market shift towards mobile devices.
The merger, which is still pending regulatory approval, is expected to close sometime this summer.
Armstrong, whose one of AOL’s largest shareholders has a piece of the company pie worth $84 million, up from $71 million before the deal, said there are no plans for job cuts. Verizon said it would fund the purchase with cash on hand and short-term corporate loans.
Shares of AOL were up nearly 19% to just over $50 during trading on Monday morning. The stock closed at $42.59 on Monday. Verizon shares were down slightly.
The deal marks a major turning point in the history of AOL, which many had left for dead just a couple years ago.