AOL Shares Surge 18% After Verizon Deal

Shares of AOL surged more than 18% in pre-market trading Tuesday after news broke that Verizon Communications is buying the digital player for $4.4 billion in cash.

AOL’s stock was trading at $50.26, which is above the $50 a share that Verizon has agreed to pay for the company that coined the term “you’ve got mail” during the dial-up era, only to struggle to keep pace with newer, nimbler digital players.

The company’s stock closed Monday at $42.59.

Verizon’s stock fell .58% in early morning trading to $49.51. It is often the case that an acquirer’s share price gets dinged on a deal of this nature. It was also an otherwise down morning for Wall Street, as futures for the Dow Jones Industrial Average and the Nasdaq both dropped on a selloff in the bond market.

AOL has had a tortured history of mergers in the past. Its 2001 union with Time Warner became a textbook example of synergies that weren’t, sending the combined companies’ shares plunging and leading to a break up in 2009.

Verizon said it is buying AOL for its mobile video platforms and the $600 million it generates in advertising revenue annually. TechCrunch, Huffington Post and Engadget are among the media brands under AOL’s umbrella are TechCrunch.

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