Verizon Communications Inc. (NYSE: VZ) agreed to buy AOL, Inc. (NYSE: AOL) in a $4.4 billion all-cash-deal that will further the largest U.S wireless firms growth ambitions in mobile and video advertising.
Following the announcement, in today’s pre-market, AOL shares soared nearly 18%, while Verizon’s stock dropped about 1.6%.
Verizon’s offer at 17% premium
Verizon Communications Inc said Tuesday that it will pay $50 a share for AOL, representing a 17% premium over AOL’s stock price on Monday. The all-cash deal represents a 23% premium over AOL’s three-month volume-weighted average price.
The announcement is a major part of the wireless giant’s effort to build digital and video platforms. The firm has set its sights on entering the crowded online video marketplace, so access to advanced technology AOL has developed for selling ads and delivering high-quality Web video will be valuable. The latest agreement will also support and connect to Verizon’s IoT (Internet of Things) platforms, creating a growth platform from wireless to IoT for consumers and businesses.
Verizon like rival AT&T Inc. believes video will be a primary driver of demand for its wireless network in the years ahead. As U.S. wireless business has matured in recent years, carriers like Verizon, AT&T Inc. and Sprint Corporation (NYSE: S) Corp increasingly fighting to garner market share from one another. Verizon clocked $127 billion in revenue and profit of $12 billion last year. Offering digital video over wireless connections represents a growth opportunity for Verizon in the future.
Verizon in series of acquisitions
As reported by ValueWalk, last year Verizon Communications made it three in a row with its acquisition of the assets of Intel Corporation (NASDAQ: INTC) Media, an Intel Corporation unit developing Cloud TV products and services that enables the delivery of TV signals ‘over the top’. In November 2013, the wireless giant acquired Uplynk, a provider of a video streaming solution that works by simplifying the whole process of online video delivery and uses a single adaptive format for all computers and devices.
