Well-known internet services provider AOL are set to spend big in order to bring a new name onto their portfolio, after agreeing a $405m cash + stock deal to purchase online video advertising specialists Adap.tv for $405m.
Aiming to help the company further capitalise in the increasingly-lucrative internet video market (as well as potential inroads into the television market), AOL’s acquisition is the biggest since they spun-off from Time Warner in 2009, even outnumbering the high-profile $315m purchase of the Huffington Post in 2011.
The terms of the arrangement will see Adap.tv receive $322m cash and $83m worth of ‘AOL common stock’, whilst being able to retain their ‘independent operation’ under the AOL video banner, with the company being led by Ran Harnevo. Meanwhile, it will be hoped by AOL that Adap.tv’s existing knowledge and income (including ‘software-driven advertising’) is a good starting block to oversee a highly profitable venture in the internet video advertising business.
Current AOL chief executive Tim Armstrong said of the reasoning behind the move as ‘traditional television’ gains an increasing presence online and in prime position for ‘automated ad placements’: “Adap.tv is positioned squarely in front of the huge opportunity these trends are presenting. AOL is a leader in online video and the combination of AOL and Adap.tv will create the leading video platform in the industry. This is about the TV business.”
For a company that recently beat expert predictions when they turned a Q2 profit, assisted by advertising sales increases, will AOL’s fortunes be further enhanced by taking Adap.tv under their wing?