US telecoms giant Verizon has announced it is to buy AOL in a deal worth $4.4bn (£2.8bn), or $50 per share.
The deal will give Verizon access to AOL’s automated ad platforms and video content – as well as global content brands The Huffington Post, TechCrunch and Engadget.
However, a report by Business Insider said that the Huffington could be spun off for up to $1bn, possibly to German media company Axel Springer.
“Verizon’s vision is to provide customers with a premium digital experience based on a global multiscreen network platform,” said Lowell McAdam, Verizon chairman and CEO.
“This acquisition supports our strategy to provide a cross-screen connection for consumers, creators and advertisers to deliver that premium customer experience.”
Verizon said the acquisition will drive its 4G and over-the-top video strategy. The agreement will also support and connect to Verizon’s Internet of Things (IoT) platforms, “creating a growth platform from wireless to IoT for consumers and businesses”.
“At Verizon, we’ve been strategically investing in emerging technology, including Verizon Digital Media Services and OTT, that taps into the market shift to digital content and advertising,” McAdam added.
“AOL’s advertising model aligns with this approach, and the advertising platform provides a key tool for us to develop future revenue streams.”
Tim Armstrong, AOL chairman and CEO, will continue to lead AOL operations after closing.
Armstrong said: “Verizon is a leader in mobile and OTT connected platforms, and the combination of Verizon and AOL creates a unique and scaled mobile and OTT media platform for creators, consumers and advertisers.
“The visions of Verizon and AOL are shared; the companies have existing successful partnerships, and we are excited to work with the team at Verizon to create the next generation of media through mobile and video.”
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.
