Verizon Communications has signed a $4.4bn deal to acquire AOL that will help drive growth through building platforms for digital, video and the internet of things (IoT).
Verizon is the latest in a growing list of technology firms and network operators to express an interest in IoT, which already includes Facebook, Google, Apple and Samsung.
Some analysts have said that while Verizon’s IoT plans are not immediately clear, the company has the potential to take digital, intelligence-based advertising to a new level.
Verizon said the acquisition will also help drive its LTE wireless video and over the top (OTT) video strategy, which aims to tap into the trend of accessing video via the internet rather than traditional TV.
“The combination of Verizon and AOL creates a scaled, mobile-first platform offering directly targeted at what eMarketer estimates is a nearly $600bn global advertising industry,” said Verizon.
Analysts said the bottom line is that the acquisition will boost Verizon’s video production and increase the amount of advertising it can sell.
The company listed AOL's key assets as its subscription business; its portfolio of global content brands, including The Huffington Post; and its programmatic advertising platforms.
Read more about IoT
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- It is possible to mitigate the privacy and security risks of the internet of things.
Verizon chairman and CEO Lowell McAdam said: "Verizon's vision is to provide customers with a premium digital experience based on a global multi-screen network platform.
“This acquisition supports our strategy to provide a cross-screen connection for consumers, creators and advertisers to deliver that premium customer experience.”
McAdam said Verizon has been strategically investing in emerging technology, including Verizon Digital Media Services and OTT, which taps into the market shift to digital content and advertising.
“AOL's advertising model aligns with this approach, and the advertising platform provides a key tool for us to develop future revenue streams,” he said.
Tim Armstrong, AOL chairman and CEO, will continue to lead AOL operations after the deal is finalised.
The transaction will take the form of a tender offer followed by a merger, with AOL becoming a wholly owned subsidiary of Verizon on completion, which is expected to be later this summer.