Verizon Communications has completed its US$4.4bn purchase of AOL just a month after first announcing the deal.
Verizon paid US$50 per share in cash for both the 47.5 million shares tendered, representing 60.37% of outstanding shares, and all remaining…
Verizon Communications has completed its US$4.4bn purchase of AOL just a month after first announcing the deal.
Verizon paid US$50 per share in cash for both the 47.5 million shares tendered, representing 60.37% of outstanding shares, and all remaining shares, the New York-based companies said in a joint statement.
As such, AOL is now a 100% subsidiary of Verizon and will no longer be traded on the NYSE.
AOL CEO Tim Armstrong will continue to lead AOL operations in an expanded role and report to Verizon executive vice president and president of product innovation and new businesses, Marni Walden. Bob Toohey, president of Verizon Digital Media Services, will report to Armstrong.
Announcing the deal in May, Verizon said it would enhance its LTE wireless video and OTT strategy. It described AOL’s key assets as its subscription business; global content brands such as The Huffington Post, TechCrunch and AOL.com; its OTT original video content; and its advertising platforms.
Wells Fargo analyst Jennifer Fritzsche has said her team believes AOL’s prime attraction was the technology it has developed to sell ads and deliver online and mobile video.
“Verizon has been focused on delivering OTT video via mobile, with plans to launch a service this summer focused on short-form live content … With the addition of AOL, Verizon should be well-positioned to benefit from an advertising model in which [it] can gather valuable information for advertisers and content providers.”
In a later note following a meeting with AOL, Fritzsche said her team had underestimated the importance of video to AOL’s business.
“As the fourth-largest online property, AOL has 200 million monthly video views and partnerships with media partners such as Fox, ABC and NBC.”
The company’s video syndication service, AOL On, has over 12 content channels and expects to launch 3,600 original content items this year, she noted, adding that it is also growing its live video content base.
“We would note that all this video activity coincides with a customer base that is increasingly mobile – 60% of AOL’s users are mobile – which dovetails nicely into Verizon’s strategy to monetise OTT video via mobile.”
Verizon’s advisors for the deal were LionTree Advisors, Guggenheim Partners and Weil, Gotshal & Manges. AOL’s advisors were Allen & Company and Watchell, Lipton, Rosen & Katz.
