Verizon has reached a deal to acquire AOL for $4.4 billion, the company announced Tuesday. The transaction, which is expected to be completed this summer, is worth $50 a share — greater than AOL’s closing price of $42.59 a share on Monday.
“Verizon’s vision is to provide customers with a premium digital experience based on a global multiscreen network platform,” said CEO and chairman Lowell McAdam. “This acquisition supports our strategy to provide a cross-screen connection for consumers, creators and advertisers to deliver that premium customer experience.”
McAdam describes AOL as a “digital trailblazer” that can drive its LTE wireless video and OTT (over-the-top video) strategy. The move will also support Verizon’s IoT (Internet of Things) platforms for consumers and businesses, the company said.
In addition to AOL, the deal includes a number of significant publishing brands, including The Huffington Post — which AOL acquired for $315 million just over four years ago — plus Engadget, TechCrunch, and MAKERS.
Tim Armstrong, AOL chairman and CEO, will continue to lead AOL operations after it becomes a Verizon subsidiary. Verizon is to fund the transaction using cash on hand and commercial paper, and the carrier expects to return to “pre-Vodafone transaction credit ratings in the 2018-2019 timeframe.”
The transaction Verizon refers to is its $130 billion buyout of Vodafone’s stake in Verizon Wireless, which was completed last February.
Interestingly, Tuesday’s announcement comes just four months after McAdam rubbished rumors of an AOL acquisition and said, “We will be more of a partner with media companies rather than doing an acquisition.”
“AOL along with lots of other media companies are potential partners for us,” McAdam added. “But to say we are having significant acquisition discussions is really inaccurate.”