Deal of the Week: Verizon to Buy AOL for $4.4B

Announcement Date  May 12, 2015 Acquirer  Verizon Communications Inc. (NYSE: VZ) Acquirer Description  Provides communications, information, and entertainment products and services to consumers, businesses, and governmental agencies worldwide  Founded in 1983 and headquartered in New York, NY Acquirer Financial  Mkt Cap: $203.0 billion  LTM EBITDA: $36.8 billion Statistics  EV: $310.6 billion  LTM EV / Revenue: 2.4x  LTM Revenue: $128.2 billion  LTM EV / EBITDA: 8.4x Target Company  AOL Inc. (NYSE: AOL) Target Description  Provides various digital brands, products, and services to consumers, advertisers, publishers, and subscribers worldwide  Founded in 1985 and headquartered in New York, NY Target Financial  Mkt Cap: $4.0 billion  LTM EBITDA: $442.6 million Statistics  EV: $3.3 billion  LTM EV / Revenue: 1.3x  LTM Revenue: $2.6 billion  LTM EV / EBITDA: 7.5x Price / Consideration  Price: $4.4 billion  Consideration: Cash Acquirer Advisors  LionTree Advisors and Guggenheim Partners Target Advisor  Allen & Company Rationale  “Verizon’s vision is to provide customers with a premium digital experience based on a global multiscreen network platform,” Lowell C. McAdam, Verizon’s chief executive, said in a statement. “This acquisition supports our strategy to provide a cross‐screen connection for consumers, creators and advertisers to deliver that premium customer experience.”  “The visions of Verizon and AOL are shared,” said Tim Armstrong, AOL’s chairman and chief executive. “The companies have existing successful partnerships, and we are excited to work with the team at Verizon to create the next generation of media through mobile and video.” Deal Points  Verizon will pay $50 a share for AOL, a 17% premium over the company’s closing share price of $42.59 on Monday  Verizon will fund the deal with cash and short‐term debt Of Note  AOL, which acquired Time Warner for $165 billion in what is broadly regarded as a debacle and the high‐water mark of the dot‐com bubble, is now a shadow of its former self, managing a small collection of media and technology properties  Mr. Armstrong will stay with AOL after the acquisition

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