Verizon today announced an agreement to buy the Internet services firm AOL for about US $4,400 billion, with the intention to diversify into digital content for different media.
Verizon, the largest US operator, will pay $50 for each share of AOL, a price which represents a premium of 17.4% compared to the end of Monday’s session ($42.59), and maintain the current Chairman and Chief AOL CEO Tim Armstrong, head of operations of the company.
With this purchase, Verizon intends to “give the customer a digital experience ‘premium’ platform-based network with a global multi. This acquisition reinforces our strategy of offering connection from different media for customers, developers and advertisers,” said the Minister Verizon CEO Lowell McAdam said in a statement.
On that note they say that, as leader of digital content and platforms for advertisers, AOL helps Verizon to address more precise and individualized customer form the new digital market and believes that, with the sum of both, an advertising business think valued at US $600,000 billion.
The operation was an open secret and Armstrong had assured the press in the days that with this merger created what is considered “the largest mobile video telephony and US business.”
Armstrong, who arrived in 2009 to AOL from Google with intent to refloat after the defeat he suffered in 2000, said today that the two companies’ shared vision. ”
“We are working with the team wishing for Verizon to create the next generation of content through mobile and video,” said in the statement.
What was announced today was the agreement between the two companies, but the legal processing of the transaction, which must be approved by the competition authorities and is expected to be ready for the coming months is still pending.
Meanwhile, from Verizon provide pay for the acquisition with cash and issuance of short-term debt and, in the earlier days, the company has already announced plans to launch a video platform beyond its current service for mobile phones.
Although he did not offer many details, the CFO, Fran Shammo said days before the operation that the intention of the operator was to offer a mixed service (with free and paid content) that would create a new model that has nothing to do with traditional television, according to The Wall Street Journal.
Verizon generated last year revenues of US $ 127,000 million and profits of $ 12,000 million, while AOL turnover last year US $ 2,500 million (9% more than last year) and reported a profit of US $ 126 million.
AOL, but it has failed to regain the glory it reached before the bubble of the “dotcom”, directed by Armstrong himself has made strategic moves of recovery as a system of choice for advertisers proven auction.
In addition, AOL owns several media, among which the Huffington Post. Following the opening of markets, shares of Verizon, one of the thirty components of the Dow Jones industrials were down 0.48% to $ 49.51, while shares of AOL shot up 18.55% in New York Stock Exchange (NYSE) to $ 50.30.