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Why Verizon is Paying $4.4 Billion for AOL

Trader Jonathan Corpina works at the post that handles AOL on the floor of the New York Stock Exchange, Tuesday, May 12, 2015. (Richard Drew/AP Photo)
Trader Jonathan Corpina works at the post that handles AOL on the floor of the New York Stock Exchange, Tuesday, May 12, 2015. (Richard Drew/AP Photo)

 

(USA Today) – Consumers’ growing love affair with watching video on smartphones and tablets is at the heart of Verizon’s $4.4 billion acquisition of AOL.

That’s because AOL, even though it remains a top Web destination, developed online advertising technology Verizon can use across mobile and broadband services to compete with Google, Yahoo, Facebook and other Silicon Valley companies that are further ahead in the business.

“This is really about AOL’s advertising platform,” says Roger Entner, an industry analyst at Recon Analytics. “It’s one of the few working video advertising platforms out there. Verizon bought it for a relatively cheap price.”

Verizon is offering $50 a share for AOL, 17% more than AOL’s closing price Monday. AOL closed at $50.52, up almost 19% Tuesday. Verizon finished at $49.62, down less than 1%.

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