Verizon Communications has agreed to buy AOL in its quest to enter the mobile video and advertising markets and find new ways to strengthen its business.
The $4.4 billion deal, officially announced on Tuesday, will turn AOL and its assets, which include The Huffington Post, Engadget and TechCrunch, into subsidiaries of Verizon. However, AOL CEO Tim Armstrong will be keeping his post, according to Reuters.
Armstrong has been gearing the company towards new vistas in mobile technology and strategic advertising. A firm believer in mobile technology being the preference for primary media consumption in the near future, he has led the company in learning about technology designed for placing text and video ads on mobile devices.
"If we are going to lead, we need to lead in mobile," Armstrong said in a memo to AOL employees on Tuesday.
The progress that AOL has achieved in the mobile technology stage will give Verizon an advantage in the field, as entering the online video marketplace has been a priority for telecommunications company, according to the Wall Street Journal. Thus, the acquisition will give Verizon access to advanced technology that AOL has developed for delivering high-quality web videos and selling ads through mobile media.
John Stratton, president of operations at Verizon, said in an investor conference on Tuesday that advertising technology was a large focus for the AOL acquisition.
"Certainly the subscription business and the content businesses are very noteworthy. For us, the principal interest was around the ad tech platform," he said during the conference.
Verizon plans to complete the deal in cash, and both companies expect to close the deal this summer.
