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Verizon to buy AOL for $4.4 billion

Verizon announced Tuesday that it’s buying AOL Inc. for $50 a share, valued at approximately $4.4 billion, to bolster the company’s plans for mobile and web video.

Calling AOL a “digital trailblazer,” Verizon CEO Lowell McAdam said in a statement that the company’s vision is to “provide customers with a premium digital experience based on a global multiscreen network platform.”

Verizon is looking to distribute content through its wide mobile phone network. Verizon is the largest mobile phone operator with 1.5 billion connected devices, AOL CEO Tim Armstrong told USA Today, adding that “the whole word is shifting to video.” Armstrong will continue to lead the AOL team, Verizon said.

Verizon, in particular, wants to expand its over-the-top video strategy. As The New York Times explains, OTT video is “shorthand for television content distributed through the Internet.”

Beyond content creation, Verizon gets AOL’s advertising arm and several online properties that include The Huffington Post, TechCrunch, Engadget, among others. Verizon will also get AOL’s dial-up Internet service, which still has more than two million subscribers. In its heyday a decade ago, AOL had 21 million dial-up Internet customers, Quartz reported.

According to The Wall Street Journal, Verizon’s president of operations, John Stratton, specifically singled out AOL’s advertising platform at an investor conference Tuesday, as a potential means to compete with the likes of Google and others with online video ads.

“Certainly the subscription business and the content businesses are very noteworthy,” he said. “For us, the principal interest was around the ad tech platform.”

Pending regulatory approval, the deal is expected to close this summer.

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