Verizon Agrees to Buy AOL for $4.4 Billion

Verizon has agreed to buy AOL in a deal worth $4.4 billion.

Buying AOL will broaden the amount of advertising Verizon can sell and will increase video production.

AOL owns websites such as the Huffington Post, Techcrunch, Engadget, Makers and AOL.com.

Verizon is trying to become more of a one-stop shop for internet services and entertainment.

AOL, famous for posting compact discs for its services through thousands of letterboxes in the 1990s, still has two million customers for its slower dial-up internet service.

It also became memorable for its messaging service, which would greet users with an audio clip that would cheerfully announce “you’ve got mail!”.

In 2001, during the dotcom stock market bubble, AOL merged with Time Warner in a deal valued at more than $160 billion when it was announced. The deal was unwound in 2009 when AOL was split off into a separate company.

In 2014, AOL had only 0.74% of the $145 billion global digital advertising market, according to eMarketer. Market leader Google had 31.4% market share last year, followed by Facebook with 7.9%.

As well as automated advertising, Verizon said the deal would give impetus to its 4G wireless video and internet video ambitions, and feed into its plans for capitalizing on the so-called “internet of things”.

AOL CEO Tim Armstrong will continue to lead the company if the deal goes through – the transaction is subject to regulatory approval.

“We are excited to work with the team at Verizon to create the next generation of media through mobile and video,” Tim Armstrong said.

Verizon is offering $50 a share for AOL, compared with AOL’s closing price of $42.59 on May 11.