Verizon said Tuesday that it was buying AOL for its digital content and advertising platforms, in a deal worth roughly $4.4 billion.
The acquisition would further drive Verizon’s LTE wireless video and “over-the-top video” strategy, and would also support and connect to Verizon’s Internet of Things platforms, creating a growth platform from wireless to IoT for consumers and businesses, the company said in a press release.
AOL’s key assets include its subscription business; its portfolio of global content brands, including The Huffington Post, TechCrunch, Engadget, MAKERS and AOL.com, as well as its millennial-focused, Emmy-nominated original video content; and its programmatic advertising platforms.
“Verizon’s vision is to provide customers with a premium digital experience based on a global multiscreen network platform,” Verizon Chairman and Chief Executive 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.”
Under the terms of the deal, Verizon would pay $50 per share, funding the transaction from cash on hand and commercial paper. The transaction would take the form of a tender offer followed by a merger, with AOL becoming a wholly-owned subsidiary of Verizon upon completion. Tim Armstrong, AOL chairman and CEO, would continue to lead AOL operations after closing, expected by the end of the summer.
Bloomberg said that the deal gives Verizon new revenue streams at a time when its main business faces increasing competition from challengers such as T-Mobile. It also directly pits the company against two leading Web advertising companies, Google and Facebook.
“They want to integrate advertising and content programming with their wireless network,” Recon Analytics analyst Roger Entner told Bloomberg. “It’s an ambitious plan. The mobile advertising market is dramatically dominated by Google.”