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Breaking News: Verizon Buys AOL For $4.4 Billion!

Posted by: on May 12, 2015 | No Comments

Verizon will acquire AOL for $4.4 billion with the deal to close over the summer after it pass regulation review. Based on reports the number one mobile carrier will pay $50 per share for the company in cash. This acquisition is a definitely a smart move by Verizon to strengthen its position into the online video space. This acquisition also gives Verizon some key media assets such as the Huffington Post, TechCrunch, Engadget, MAKERS and The purchase of AOL  at $4.4 billion is a 15% premium to AOL’s closing share price on Monday.

Let’s take a quick look back at the history of AOL of the last 30 years. Initially AOL started as a company called Control Video Corporation (CVC) founded by Bill von Meister. The company sole product was an online video service called GameLine. Subscribers bought a modem from the company for $49.95 and paid a one-time setup fee. In 1983 Steve Case was hired as the company’s marketing consultant for CVC. . In May 1983, Jim Kimsey became a manufacturing consultant for Control Video, which was near bankruptcy. Kimsey was brought in by his West Point friend Frank Caufield, an investor in the company. Around early 1985, von Meister quietly left the company he started. Through a series of events Steve Case was promoted from executive vice president to CEO and when Steve became CEO Jim Kimsey retired in 1991. Under the leadership of Steve Case AOL grew into an incredible online service company.

LB. Remarks at Clinton Global Initiative Annual Meeting.

Laura Bush announces a $60 million partnership between the U.S. Government and the Case Foundation at the Clinton Global Initiative conference in New York on September 20, 2006.

AOL pioneered the concept of social media, chatrooms, instant messaging and games. Key strategies that helped AOL were the unlimited access to their service for $19.95 when other competitors like CompuServe were charging for each minute of access on their network. AOL userbase grew to 10 million and ultimately reaching 26 million in 2002. Steve Case strategy to provide interactive games was truly a huge factor in AOL success to capture monthly users.


In 2001 AOL merged with the media giant Time Warner creating one of the world’s largest media, entertainment and communications companies. The acquisition was a $164 billion merger and was completed in January 2001. The successful merger of AOL and Time Warner soon ran into trouble as the dot-com recession and accounting scandals emerged in 2001. Around 2003 Steve Case announced his resignation as chairman in January 2003.

The Verizon purchase of AOL makes perfect sense with the company’s focus digital, video platforms and connected devices network. With the acquisition AOL will become a separate division of Verizon with current AOL CEO Tim Armstrong remaining on the job. Moving forward the mobile giant will definitely earn some key assets with the AOL deal. I’m looking at this deal and thinking it was a very smart move for Verizon. AOL content sites reach 250 million visitors around the world. Verizon just scored a win for $4.4 billion to acquire a very valuable asset in AOL. Wow!

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