In a deal valued at $4.4 billion, Verizon Communications has said they will buy AOL Inc. The deal will allow Verizon to gain access to AOL’s digital advertising content and service.
The offer, which is $50 per share, represents a premium of 17.4 percent to AOL’s closing on Monday of $42.59.
Before the bell on Tuesday, shares soared to $50.05, an increase of 18 percent. Verizon’s stock was down 1 percent.
Upon completion, the deal will make AOL a wholly owned subsidiary of Verizon. In the meantime, the deal will take on the form of a tender offer, then a merger. It includes $300 million of AOL debt.
The transaction is expected to be complete this summer.
“Verizon’s acquisition further drives its LTE wireless video and OTT (over-the-top video) strategy,” Verizon said in a statement.
Tim Armstrong, AOL’s chairman and CEO, will remain at his position once the deal is finalized.
“Verizon is a leader in mobile and OTT connected platforms, and the combination of Verizon and AOL creates a unique and scaled mobile and OTT media platform for creators, consumers and advertisers,” Armstrong said in the announcement.
He also said executing this deal was the next step for the company to continue growing.
“We turned the company around. We outperformed the S&P 500 for the last five years, and when you look at where we are today and where we’re going, we’ve made AOL as big as it can possibly be in today’s landscape, but if you look forward five years, you’re going to be in a space where there are going to be massive, global-scale networks, and there’s no better partner for us to go forward with than Verizon,” Armstrong told CNBC’s “Squawk Box.”
“It’s really not about selling the company today. It’s about setting up for the next five to 10 years, and we’ve spoken for years about this,” he added.