CEO revives AOL
In the previous parts of this series, we looked at Verizon’s (VZ) acquisition of AOL (AOL) for $4.4 billion. Time Warner merged with AOL in 2000 in a deal valued at a whopping $350 billion. In 2009, AOL spun off from Time Warner (TWX).
After the spin-off, Tim Armstrong became the CEO (chief executive officer) of AOL. Armstrong was previously an executive at Google (GOOGL). Armstrong revived AOL, which is evident from the huge boost in AOL’s stock price that has nearly doubled in the last six years.
Armstrong took a number of initiatives to revive AOL. As we saw in the previous part, under Armstrong’s leadership, AOL acquired 5min Media and Adap.tv to develop its video ad technology. AOL also sold 800 patents to Microsoft (MSFT) for $1.1 billion in 2012, which fetched far better valuation than analysts expected. These patents were related to online advertising and mobile phones.
A few months ago, activist investor firm Starboard Value sent a letter to Yahoo! (YHOO), asking the company to consider acquiring AOL. The rationale that Starboard gave Yahoo! was that a combined entity of Yahoo! and AOL could better challenge Google’s and Facebook’s (FB) dominance in the digital advertising market. Although Yahoo! was never interested in this deal, it did make AOL’s stock volatile.
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