Robbins Arroyo LLP: Acquisition of AOL Inc. (AOL) by Verizon Communications Inc. (VZ) May Not Be in Shareholders’ Best Interests
Robbins Arroyo LLP is investigating the proposed acquisition of AOL Inc. (NYSE: AOL) by Verizon Communications Inc. (NYSE: VZ). On May 12, 2015, the two companies announced the signing of a definitive merger agreement pursuant to which Verizon will acquire AOL. Under the terms of the agreement, AOL shareholders will receive $50.00 in cash for each share of AOL common stock.
Is the Proposed Acquisition Best for AOL and Its Shareholders?
Robbins Arroyo LLP’s investigation focuses on whether the board of directors at AOL is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $50.00 merger consideration represents a premium of only 17.4% based on AOL’s closing price on May 11, 2015. This premium is significantly below the average one-day premium of nearly 39% for comparable transactions within the past year. Further, the $50.00 merger consideration is significantly below the target price set for AOL by five different analysts, the highest of which were set at $67.00 by Jeffries on April 14, 2015, and $61.00 by Monness, Crespi, Hardt & Co. on February 11, 2015. In the last three years, AOL traded as high as $53.28 on January 16, 2014, and most recently traded above the merger consideration – at $50.18 – on February 4, 2014.
On May 8, 2015, AOL reported strong quarterly earnings results for its first quarter 2015. Total revenues were $625.1 million, a 7% increase compared to the first quarter of 2014. Additionally, AOL beat consensus analyst estimates for adjusted EPS and sales in three out of its last four quarters, and beat estimates for adjusted net income in its most recent two quarters. In commenting on these results, AOL Chairman and Chief Executive Officer Tim Armstrong remarked, “AOL grew its consumer base strongly and saw continued strength in video, mobile and programmatic advertising, while we also updated the structure and capabilities of the company. AOL continues to grow in strength and we are on a mission to scale the first Media Technology company of the internet and mobile age.”
In light of these facts, Robbins Arroyo LLP is examining AOL’s board of directors’ decision to sell the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
AOL shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.
AOL shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.