Verizon Buys AOL for $4.4 Billion

Deal Gives Carrier Access to Digital Content, Ad Platforms

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Verizon Communications Inc. agreed to buy AOL Inc. in a deal valued at $4.4 billion, giving the largest U.S. wireless carrier digital content and Web advertising platforms.

Verizon will pay $50 a share, a 17% premium over AOL's stock price on Monday. AOL Chief Executive Officer Tim Armstrong will continue to lead AOL's operations after the deal is completed, the companies said Tuesday in a statement.

"AOL has once again become a digital trailblazer, and we are excited at the prospect of charting a new course together in the digitally connected world," Verizon CEO Lowell McAdam said in the statement.

The deal could have implications across the digital-advertising industry.

Verizon has the ability to identify users as they move between desktop and mobile devices. That data could solve one of the biggest problems plaguing digital advertising companies, which, due to poor functionality of cookies on mobile devices, have difficulty getting their targeting to work outside of desktop.

Verizon is already dipping its toes into ad-tech in an attempt to put this data to use. Last year, it launched PrecisionID, a cookie alternative that works across screens, with a limited group of partners.

AOL, for its part, has a powerful bundle of ad-tech software that is used to buy ads across the web. If Verizon creates a single identifier and grants exclusivity to AOL's ad-tech platform, the result could be valuable for advertisers and lucrative for the combined entity.

The only other big player with a solid solution to tie user identity across devices is Facebook. Rich in login data, the company relaunched the Atlas ad server in September to take on this problem. AOL introduced technology to address the issue last October, but it's not as accurate as Facebook's.

Verizon said it plans to fund the deal with cash on hand and commercial paper. The transaction is expected to be completed by the end of the summer, the companies said.

AOL's shares jumped as much as 19% to $50.70 in early trading, above Verizon's offer price.

--Bloomberg News with contributions from Alex Kantrowitz

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