Telecommunications giant Verizon said Tuesday that it would buy AOL for about $4.4 billion, advancing the company's push in the mobile and advertising fields.
The acquisition gives Verizon entry into the increasingly competitive online video space. The company, based in New York, is the country's largest wireless carrier as well as an Internet and TV provider, and it is increasingly over the wireless space that telecom companies are fighting to win customers through video content.
Last month, Verizon said it was preparing to launch a video service over the summer targeting mobile devices and it is establishing partners to deliver that content. It also recently began offering tiered cable bundles, putting it at odds with major content companies like ESPN, as more customers cut the cord in favor of streaming video.
AOL has developed technology for selling ads and delivering Web video, which Verizon could leverage in its new video service, according to The Wall Street Journal. AOL also owns news websites The Huffington Post, TechCrunch and Engadget.
Verizon said it will pay $50 per share for the company in cash, a 15 percent premium to AOL’s closing price on Monday.
“Verizon’s vision is to provide customers with a premium digital experience based on a global multiscreen network platform,” said chairman and CEO Lowell McAdam in a statement.
The deal is expected to close this summer and Tim Armstrong, AOL chairman and CEO, will continue to lead that company. He has spearheaded AOL's transformation into one of the most successful advertising technology companies.
“When you look at where we are today and where we are going, we have made AOL as big as it can possibly be in today's landscape,” Armstrong told CNBC on Tuesday.
“There is no better partner for us to go forward with than Verizon,” he said.
AOL was a technology behemoth in 2000 when it merged with Time Warner in a deal worth $350 billion. That deal proved a disaster, and AOL was spun off from Time Warner in 2009 and was listed on the New York Stock Exchange at a value of $3.4 billion.
Verizon has been spending aggressively to expand its business. In February it bought licenses worth $10.4 billion in a government sale of wireless airwaves for mobile data.
Al Jazeera and wire services