Verizon Communications Inc. has bought AOL Inc. for $4.4 billion in an all-cash deal that was finalized in the second week of May 2015.
This deal combines one of the largest mobile network providers with one of the top online content producers - something that gives AOL the potential to be a major player in the digital media business. Verizon will pay $50 a share for AOL, which values AOL more than the price the stock closed at on Monday - $42.59.
Verizon made the deal in hopes of getting into the online video marketplace, which is full of competition online at the moment. They will now have access to advanced technology AOL has developed for selling ads and providing a platform for high-quality video.
“Certainly the subscription business and the content businesses are very noteworthy. For us, the principal interest was around the ad tech platform,” said Verizon’s president of operations, John Stratton, at a conference shortly after the deal was confirmed.
AOL provides online video services, content, and advertisements to 40,000 publishers. It brings in $600 million in advertising. Some of the news sites it has include The Huffington Post, TechCrunch, and Engadget.
Verizon is looking for any advantage it can get, as the U.S. wireless business has become more advanced in recent years. They have been fighting with AT&T and Sprint to steal market share for quite some time now. Presenting customers with digital video-over-wireless connections represents potential growth in the coming years for Verizon, which last year brought in $127 billion in revenue and profit of $12 billion.
"I think we're at a tipping point," said Tim Armstrong, CEO of AOL. "I think this is absolutely a time period almost like the beginning of the Web. There are years ... where everything changes. And I think we're in one of those time periods right now."
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