Verizon Agrees To Buy AOL In $4.4 Bln Deal

(RTTNews) - Verizon Communications Inc. (VZ) Tuesday announced an agreement to purchase AOL Inc. (AOL), a key player in the digital content and advertising platforms space, for $50 per share, at an estimated total value of around $4.4 billion. The deal, which will help the telecom giant build digital and video platforms, is expected to close this summer.

Verizon said the acquisition further drives its LTE wireless video and over-the-top video or OTT strategy. The agreement will also support and connect to Verizon's Internet of Things or IoT platforms, creating a growth platform from wireless to IoT for consumers and businesses.

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.

The combination is expected to create a scaled, mobile-first platform offering directly targeted at what is estimated to be a nearly $600 billion global advertising industry.

Tim Armstrong, AOL chairman and CEO, will continue to lead AOL operations after closing of the transaction.

The transaction will take the form of a tender offer followed by a merger. AOL will become a wholly owned subsidiary of Verizon after the deal is completed.

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 time frame.

Transaction advisers for Verizon were LionTree Advisors; Guggenheim Partners; and Weil, Gotshal & Manges. AOL's advisers were Allen & Company LLC and Wachtell, Lipton, Rosen & Katz.

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."

VZ, which closed down 0.7 percent on Monday at $49.80, fell 0.7 percent in pre-market activity.

AOL, which closed down 1.9 percent in the previous session, surged around 18 percent in pre-market activity.