Verizon has confirmed its plans to purchase AOL for a sum of $4.4 billion, in a move that AOL CEO Tim Armstrong believes will pave the way for a concerted, collaborative push by both firms into the world of mobile and video content.
The $4.4 billion cost equates to around $50 per share, and while AOL may be seen as a fallen giant that enjoyed its heyday during the dial-up Internet era, it remains a big cheese in the world of online content. In joining forces with Verizon, Armstrong's memo to employees outlines the collective intention to create "the best media technology company in the world."
Verizon has still to provide more details regarding the acquisition, but from what we can gather, AOL will operate as a faction within the Verizon business. Verizon's broad content networks will be central to enhancing AOL's online brands, which include the likes of Engadget, TechCrunch and The Huffington Post.
Verizon sees the acquisition as a key development in its LTE wireless video efforts. With AOL also offering Emmy-nominated original video content, Verizon customers will likely be the first to reap the benefits of this merger in terms of content. But aside from the mobile and video side of the deal, these two giants are looking to revolutionize the world of mobile advertising.
Despite the ubiquitous nature of mobile devices, mobile advertising is estimated to account for one-twelfth of the $600 billion global advertising industry. In building a "scaled, mobile-first platform offering" that can better target consumers, Verizon and AOL could improve upon the current state of play, although from a consumer perspective, this does seemingly translate to more ads.
Given what Verizon offers in terms of networking, allied to the products and services that AOL already runs, this seems a mutually beneficial agreement for both parties. Whether these firms will evolve into the advertising and media superpower that Armstrong promises remains to be seen, but with the AOL chief suggesting the partnership will spawn the "next generation of media through mobile and video," the ambition is definitely there.
Once the usual regulations have been signed off, the deal should be officially complete by the summer of this year.
source - Verizon