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Verizon to acquire AOL for $4.4 bn

MUMBAI: Taking a step towards building digital and video platforms to drive future growth, Verizon Communications Inc has announced the signing of an agreement to purchase AOL Inc for $50 per share, which is an estimated total value of approximately $4.4 billion.

With the purchase, Verizon will aim to create unique and scaled digital media platforms for consumers, advertisers, and partners.

Verizon chairperson and CEO Lowell McAdam 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.”

Verizon’s acquisition further drives its LTE wireless video and over-the-top video (OTT) 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.

Upon completion of the acquisition, AOL chairperson and CEO Tim Armstrong will continue to lead AOL operations.

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.”

AOL’s key assets include its subscription business, portfolio of global content brands including The Huffington Post, TechCrunch, Engadget, Makers, and, as well as its millennial-focused OTT, original video content and programmatic advertising platforms.

The transaction will take the form of a tender offer followed by a merger, thus AOL becoming a wholly owned subsidiary of Verizon upon completion. Subject to customary regulatory approvals and closing conditions, the deal is expected to close this summer.

Verizon expects to fund the transaction from cash on hand and commercial paper. The company continues to expect to return to pre-Vodafone transaction credit ratings in the 2018–19 timeframe.

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.