Verizon to buy AOL for $4.4 billion

May 12, 2015 12:06 PM by News Staff

NEW YORK - Wireless giant Verizon (VZ) is buying AOL for $4.4 billion in a deal that will expand its ability to deliver mobile video and advertising services.

Verizon Communications Inc. said Tuesday that it will pay $50 per share for the company in cash, a 15 percent premium to AOL's closing price on Monday.

The purchase of AOL comes amid mounting competition in the business of serving online video, with Verizon, the country's largest wireless carrier as well as an Internet and TV provider, battling with AT&T (T) and Sprint (S).

AOL owns The Huffington Post, TechCrunch, Engadget, MAKERS and It also operates the second-largest online video network in the U.S. The company's recently launched "One by AOL" platform offers technology that lets advertisers and ad agencies manage their online marketing programs.

But while AOL's mobile revenue has surged, the company's overall growth has slowed recently.

For Verizon, the transaction is an entryway into the increasingly competitive online video space.

Last month, the company said it was preparing to launch a video service over the summer targeting mobile devices, and it is establishing partners to deliver that content. It also recently began offering tiered cable bundles, putting it at odds with major content companies like ESPN, as it sees more customers cut the cord in favor of streaming video.

"This acquisition supports our strategy to provide a cross-screen connection for consumers, creators and advertisers to deliver that premium customer experience," said Verizon CEO Lowell Adams in a statement announcing the purchase.

AOL shares were up $7.79, or 18.4 percent, to $42.59 ahead of the start of trading. Verizon's stock price rose 0.7 percent to $49.80.

The deal is expected to close this summer and Tim Armstrong, AOL chairman and CEO, will continue to lead that company.

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