Verizon will acquire digital company AOL for approximately $4.4 billion, a move that could potentially boost the telecommunications giant's campaign on digital advertising and mobile platforms, based on the company's announcement last Tuesday.
Verizon will purchase every share of AOL at $50. AOL has been focusing on video advertising for the past months since their disastrous split with Time Warner back in 2000. Verizon will pay 17 percent more than the closing stock price of AOL last Monday, which is at $42.59.
Reports said Tim Armstrong, AOL's CEO and chairman, will remain in order to run AOL's operations after the acquisition.
AOL has a number of digital properties under its belt, which include the brands Engadget, TechCrunch and The Huffington Post, but the development of AOL's advertising was the trigger of the acquisition.
The Huffington Post division has increased its value to more than $1 billion, and AOL has been promoting it as part of securing Verizon's acquisition, according to Re/code citing numerous sources.
AOL has bought the video programming service Adap.TV for $ 405 million and has continued its focused efforts in the advertising market. It made great progress in the past months through video and programmatic advertising and automated ads capitalizing on computer algorithms that would select a specific audience. Verizon aims to develop more on this through its mobile platforms.
Programmatic advertising revenues will continue to increase up to $14.88 billion for this year, based on research firm eMarketer, and by 2016, it will surpass the $20 billion mark, which is nearly 67 percent of the display ad market. Reports also noted that digital video ad spending is also booming, anticipated to accelerate by 33 percent to $7.77 billion for this year.
AOL has now logged its share of the global digital ad market to 0.74 percent in 2014, behind titans Google at 31. 4 percent, and Facebook at 7.9 percent, according to eMarketer. AOL's share was already at 2.1 percent in the U.S. last year.
AOL represented a leading role in the development of digital services, most outstandingly through its dial-up Internet access. AOL most current quarterly marks show the company still boasts 2.1 million dial-up consumers.
"Verizon's vision is to provide customers with a premium digital experience based on a global multiscreen network platform. This acquisition supports our strategy to provide a cross-screen connection for consumers, creators, and advertisers to deliver that premium customer experience," Verizon CEO Lowell McAdam said.
The deal disclosed this Tuesday is projected to be completed this summer. Regulators will still need to approve this deal to be finalized.
Photo: Mike Mozart | Flickr