Verizon Acquires AOL for 4.4B


Verizon Acquires AOL for $4.4 Billion

Verizon (NYSE:VZ)

This morning the rumors of Verizon (NYSE:VZ) to bring forth to acquire AOL (NYSE:AOL) for a deal in all cash for $4.4 billion have come true. The deal brings forth that AOL will now be a division of the wireless carry Verizon and will oversee all the current assets of AOL. Verizon has targeted AOL for its leading technology in video mobile advertisement, to use on their networks and not for that but AOL also is the leader in programmatic advertising. This type of advertising helps automate ad sales to make them much more efficient. With the merger, Verizon will also be getting part of AOL many people don’t think of such as the Huntington Post and MapQuest. This will build great content for Verizon and growth to come. The mobile internet ad spending in 2016 is expected to top $100 billion  where Verizon hopes to take a chunk home for them.

Low cost trades, higher leverage

Words from Verizon CEO

Verizon’s chairmen and CEO said in a statement about the deal “Verizon’s vision is to provide customers with a premium digital experience based on a global network platform. This acquisition supports our strategy to provide a cross screen connection for consumers, creators and advertisers to deliver that premium customer experience” . With the deal the customer and advertiser relationship will be more connect to the actually needs of the consumers. “This strategy speaks to a possible sea change in wireless monetization” analyst Craig Moffett wrote in his research piece. Verizon has been lacking in revenue sources and advertisement maybe the thing they need. If this future of adverting works, Verizon will be able to separate them from the rest.

AOL CEO Tim Armstrong

Tim Armstrong will remain at AOL for an undisclosed time but he commented he will be there for the long haul. With Mr. Armstrong staying, he will be a valuable asset to Verizon for his guidance into the mobile ad monetization revolution.  Under Tim Armstrong AOL shares have risen 120 percent since the failed Time Warner deal in 2009.

AOL’s Past Deal

AOL has most famously been a part of another merger with Time Warner (NYSE:TWX), which had fell apart. The deal was for $183 billion back in the tech bubble of 2000. Will this deal lead to a better outcome than the late Time Warner deal for Verizon?