Verizon is buying AOL for about $4.4 billion, or $50 a share, the companies announced Tuesday.
The deal is part of Verizon’s (VZ, Tech30) new focus on digital and video platforms, as well as its connected device network, which it calls “Internet of Things,” the telecommunications company said.
AOL (AOL, Tech30), best known in the 90s for its dial-up internet service, now has several media brands, including The Huffington Post, TechCrunch, Engadget, MAKERS and AOL.com. It boasts nearly $600 million in advertising revenue.
AOL will become a separate division within Verizon. Tim Armstrong, CEO of AOL, will keep his job.
Armstrong told CNN’s Poppy Harlow that the combination will open new growth opportunities for both AOL and Verizon amid the shift toward mobile devices.
“We were, as a company, essentially very interested in the platform transition to mobile,” said Armstrong. “There is really a platform shift happening in the world.”
The merger, which is subject to regulatory approval, is expected to close sometime this summer.
Armstrong, whose stake in AOL is now worth $84 million, up from $71 million before the deal, said there are no plans for job cuts. Verizon said it would fund the purchase with cash on hand and short-term corporate loans.
Shares of AOL jumped 17% to roughly $50 ahead of the opening bell. The stock closed at $42.59 on Monday. Verizon shares were down slightly.
By Ben Rooney for cnn