Verizon Communications Acquires AOL in All-Cash Deal Worth $4.4 Billion

Verizon has acquired one-time media leader AOL in a deal for $4.4 billion in a bid to expand the ‘over-the-top

Verizon Communications (NYSE:VZ) has unveiled its landmark deal, acquiring AOL (NYSE:AOL) in an all-cash deal worth $4.4 billion, according to a Reuters report.

Verizon is the largest mobile phone provider in the United States, having now acquired the former media juggernaut and one of the most historic players internet realm.

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Fall from Grace

AOL (NYSE:AOL) itself acquired Time Warner for $165 billion during the height of the dot.com bubble, which by and large has proved to be a cataclysm for the company. Today, AOL merely manages a limited collection of media and technology properties.

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Conversely, Verizon (NYSE:VZ) is pulling the trigger on the deal in a bid to augment its video offerings to a rapidly growing clientele. The company has already become an integral player in the US market through its distribution of mobile video, though the company is also making a push to capture the ‘over-the-top video’ market, i.e. television content distributed through the Internet.

According to Lowell C. McAdam, Verizon’s Chief Executive, in a recent statement on the acquisition, “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.”

“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,” added Tim Armstrong, AOL’s Chairman and Chief Executive.

As a result of the deal, Verizon (NYSE:VZ) will pay a total of $50 a share for AOL (NYSE:AOL), which amounts to a 17% jump over the company’s closing share price of $42.59 yesterday.

At the time of writing, AOL’s shares (NYSE:AOL) were trading at $50.51 during morning trading, up 18.57% Tuesday on news of the acquisition. By extension, Verizon (NYSE:VZ) shares have dropped below the $50 threshold, down just -0.80% at the time of writing.

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