Verizon to Acquire AOL for $4.4 Billion

RMN Digital | May 13, 2015 | Corporate, Finance | No Comments

Lowell McAdam

With the aim to build digital and video platforms, Verizon Communications Inc. (NYSE, Nasdaq: VZ) announced Tuesday the signing of an agreement to purchase AOL Inc. (NYSE: AOL) for $50 per share — an estimated total value of approximately $4.4 billion.

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

AOL offers digital content and advertising platforms space, and the combination of Verizon and AOL is expected to create a new platform in the estimated $600 billion global advertising industry.

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 OTT, Emmy-nominated original video content; and its programmatic advertising platforms.

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.”

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

The transaction will take the form of a tender offer followed by a merger, with AOL becoming a wholly owned subsidiary of Verizon upon completion.

The transaction is subject to customary regulatory approvals and closing conditions and is expected to close this summer.

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 timeframe.

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

Verizon Communications Inc. (NYSE, Nasdaq: VZ), headquartered in New York, is a global company in delivering broadband and other wireless and wireline communications services to consumer, business, government and wholesale customers.