Verizon Communications Inc’s (NYSE/VZ) bid to buy AOL Inc. (NYSE/AOL) wrapped up on Tuesday June 23rd as the company challenges Google Inc. and Facebook Inc. for a piece of the web advertising market.
The acquisition cost Verizon $50.00 per share; a necessary expense as the company attempts to expand into adjacent industries. The wireless provider wants to branch out into digital advertising, mobile streaming, and original content.
According to an internal AOL memo from when the deal was announced, Verizon is “acquiring AOL with the strategy of building the biggest media platform in the world.” (Source: Techcrunch, May 12, 2015.)
AOL CEO Tim Armstrong will continue in his current role, except he will now report to Marni Walden, Executive Vice President of product innovation and new business at Verizon.
The company sees an optimal match between its subscriber base of 100 million and AOL’s powerful automated advertising division. Using a mechanized exchange for ad buying, also known as programmatic advertising, is a business line estimated to reach $32.0 billion by 2017.
Its main rivals in programmatic advertising are Google’s Doublick Exchange, Yahoo! Inc.’s Right Media, and Facebook Inc.’s Exchange. (Source: Bloomberg, March 27, 2014.)
Verizon is slimming down other parts of its business in order to focus on the upcoming strategy. On the same day the AOL deal was finalized, Verizon sold CyberTrust Enterprise SSL to DigiCert, a market leader in identity solutions. (Source: Techcrunch, June 23, 2015.)
The company is preparing to launch a video streaming service during the summer. They have negotiated special content deals with ESPN and the NFL in order to provide consumers with flexible programming options.
Near the close of trading hours, Verizon’s shares were up 0.6%.