Verizon Agrees to Buy AOL for $4.4 Billion

Business

May 12, 2015

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.

AT&T to acquire DirecTV for $48.5 billion

Business

May 19, 2014

AT&T will acquire satellite television provider DirecTV in a cash and stock deal valued at $48.5 billion.

If approved, the deal gives AT&T access to DirecTV’s 40 million digital TV customers in the US and Latin America.

The deal would also give AT&T a new source of revenue beyond its traditional telecommunications business.

AT&T will acquire DirecTV in a cash and stock deal valued at $48.5 billion

The board of directors at both companies have approved the merger.

However, the deal is subject to approval by DirecTV shareholders, and needs to be reviewed by US regulators, including the Federal Communications Commission and the Department of Justice.

Both companies are hopeful the transaction will complete in about 12 months.

AT&T chairman and chief executive Randall Stephenson said in a statement: “This is a unique opportunity that will redefine the video entertainment industry and create a company able to offer new bundles and deliver content to consumers across multiple screens – mobile devices, TVs, laptops, cars and even airplanes.”

DirecTV is a leading pay TV provider in the US and Latin America. Meanwhile AT&T is a telecommunications provider and it boasts of a nationwide mobile network and a high-speed broadband network, which the company says will cover 70 million customer locations, with the broadband expansion enabled by this transaction.

DirecTV’s premier content includes exclusive pay TV rights to NFL Sunday Ticket which gives subscribers access to every American football game played on Sunday afternoons, which they can view on TV, laptops and mobile devices.

Under the terms of the merger, DirecTV shareholders will receive $95 per share, comprising $28.50 per share in cash and $66.50 per share in AT&T stock.

AT&T intends to finance the cash portion of the transaction through a combination of cash on hand, sales of assets and loans.

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