Verizon Vies for Mobile Ad Space in AOL Acquisition

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Verizon Vies for Mobile Ad Space in AOL Acquisition

Jeff Valks May 13, 2015

With ambitions for growth in the mobile and video advertising world, Verizon Communications (VZ) announced yesterday that it will purchase AOL, Inc. (AOL) in a deal worth $4.4 billion.

The Acquisition

In an all-cash deal, Verizon vies to enter a crowded marketplace, leaning heavily on the advanced video technology developed by AOL to sell ads, while delivering high-quality viewing for the web, especially on mobile platforms.

“Certainly the subscription business and the content businesses are very noteworthy. For us, the principal interest was around the ad tech platform,” said John Stratton, President of Operations for Verizon.

Price-wise, AOL closed at $42.59 on Monday afternoon. However, when news of the multi-billion dollar deal broke early Tuesday morning, its shares shot up immediately with an opening price of $50.17, hitting a day-high of $50.75 before settling down at $50.52 at the close. Conversely, shares of VZ finished in a less-than-impressive fashion having moved up just 22 cents to finish the day at $49.62.

The deal is still pending regulatory approval and won’t officially close until the summer—precisely when Verizon says it plans to launch video services set to focus entirely on the mobile platform.

Mutual Funds to Watch

Investors interested in VZ may consider a mutual fund as an alternative to owning the individual stock. The funds below currently hold the largest stakes in VZ.

The Bottom Line

The purchase marks another pivotal moment in the iconic history of AOL, having been left to rust at the side of the digital highway just a few years ago.

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