Verizon's $4.4 billion deal for AOL sends AOL stock on a tear
| New York
Verizon聽Communications Inc said it would buy聽AOL聽Inc in a $4.4 billion deal that gives the biggest U.S. wireless carrier access to聽AOL's successful digital advertising service and content including聽the Huffington Post聽news website.
The offer of $50 per share represents a premium of 17.4 percent to聽AOL's Monday close of $42.59.
AOL聽shares traded as high as $50.70 before the opening bell on Tuesday.聽Verizon聽shares were down about 1 percent at $49.32.
The deal, which includes about $300 million of聽AOL聽debt, will take the form of a tender offer followed by a merger, with聽AOL聽becoming a wholly owned subsidiary of聽Verizon.
Verizon聽said it expects to fund the transaction from cash on hand and debt.
"Verizon's聽vision is to provide customers with a premium digital experience based on a global multiscreen network platform," said chairman and CEO Lowell McAdam in a printed statement.
Tim Armstrong, who has spearheaded聽AOL's transformation into one of the most successful advertising technology companies, will continue to lead the company after the sale.
"When you look at where we are today and where we are going, we have made聽AOL聽as big as it can possibly be in today's landscape," Armstrong told CNBC.
"..There is no better partner for us to go forward with than聽Verizon," he said.
Activist-investor聽Starboard Value聽LP had urged Yahoo Inc to consider a merger with聽AOL, whose businesses include the TechCrunch blog.
AOL聽reported a 7.2 percent rise in first-quarter revenue to $625.1 million, boosted by demand for its real-time bidding platform that helps advertisers place video and display ads on other digital properties.
AOL聽was a technology behemoth in 2000 when it bought Time Warner for more than $160 billion. That deal became a disaster and聽AOL聽was spun off from聽Time Warner聽in 2009 and was listed on the New York Stock Exchange at a value of $3.4 billion.
Verizon聽has been spending aggressively to expand its business. In February it bought licenses worth $10.4 billion in a government sale of wireless airwaves for mobile data.
LionTree Advisors,聽Weil Gotshal聽& Manges and Guggenheim Partners advised聽Verizon.
AOL's advisers were Allen & Co LLC and Wachtell Lipton Rosen & Katz.
Up to Monday's close,聽AOL's shares had gained 12 percent and聽Verizon's 3.4 percent in the past 12 months.聽
