Verizon Communications, an American broadband and telecommunications company and the largest U.S. wireless communications service provider, announced Tuesday that it is buying New York City based AOL, previously known as America Online, for $50 per share in a transaction valued approximately at $4.4 billion.
The deal is believed to reinforce Verizon’s desire to enter the mobile video and advertising business, while giving them access to technology AOL has developed for selling ads and delivering high-quality web video.
Tim Armstrong, AOL chairman and CEO, will continue to lead AOL operations after closing. AOL will become a wholly owned subsidiary of Verizon upon completion. The transaction is subject to customary regulatory approvals and closing conditions and is expected to close this summer.
The Wall Street Journal quoted Verizon’s Chief Financial Officer Fran Shammo, who said recently Verizon would be launching a video service focused on mobile devices this summer that should offer “a mix of paid, free and ad-supported content and won’t try to replicate traditional TV.”
One of their first Internet service providers in the United States, AOL is now the fourth largest online property in the country with 200 million monthly visitors to its sites.
According to CNET, AOL still has more than two million dial-up customers.
In addition, the acquisition gives Verizon access to AOL-owned media content properties that include The Huffington Post, TechCrunch, Engadget, MAKERS and AOL.com, as well as its millennial-focused OTT, Emmy-nominated original video content, and its programmatic advertising platforms.
Lowell McAdam, Verizon chairman and CEO, said the deal “supports our strategy to provide a cross-screen connection for consumers, creators and advertisers to deliver that premium customer experience.”