Verizon swoops for AOL in $4bn bid to boost ads

 
Charlotte Henry
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VERIZON, the US mobile phone network, has made a shock $4.4bn (2.81bn) bid for internet stalwart AOL, offering $50 a share yesterday.

Verizon is keen to get its hands on AOL’s advertising technology, and use it to deliver targeted advertising to mobile devices.

AOL, a firm reminiscent of the dot com boom era, also owns major web publishers such as The Huffington Post, Endgadget and Techcrunch. It is unclear at this point whether Verizon will maintain these properties or sell them off.

In a statement, the mobile operator confirmed that AOL chief executive Tim Armstrong will continue to run the company. He took over AOL in March 2009, having left Google.

Lowell McAdam, Verizon chairman and CEO, said: “This acquisition supports our strategy to provide a cross-screen connection for consumers, creators and advertisers to deliver that premium customer experience.”

Armstrong commented: “The visions of Verizon and AOL are shared; the companies have existing successful partnerships, and we are excited to work with the team at Verizon to create the next generation of media through mobile and video.”

Analysts also welcomed the surprise deal. Paolo Pescatore, director of multiplay and media at CCS Insight said: “We believe it is a smart move for Verizon that strengthens its presence in content distribution and especially in video.”

HOW MUCH IS AOL WORTH?

$0.61bn market cap after float in 1992

$105bn before the Time Warner deal in 1999

$222bn peak market cap in December 1999

$350bn value of a combined AOL Time Warner

$20bn AOL valuation based on £1bn Google investment

$5.7bn valuation based on Time Warner repurchasing Google stake

$3.2bn market cap after demerger with Time Warner

$3.9bn valuation now

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