Verizon-AOL deal is 'brilliant,' analyst says

Verizon agreed to buy AOL for $4.4 billion, the two companies announced Tuesday. The deal gives Verizon a great video advertising platform and AOL the financial freedom to develop original programming. 

An AOL logo is posted outside the building where the company's headquarters is located, Tuesday, May 12, 2015 in New York. Verizon is buying AOL for about $4.4 billion, advancing the telecom's push in both mobile and advertising fields.

Mark Lennihan/AP

By Fred Imbert, CNBC

May 12, 2015

CNBC's Jim Cramer said Tuesday he believes Verizon and AOL will benefit from their $4.4 billion merger deal.

"AOL are the only guys who have figured out programmatic [advertising] for video. This is a great way to take on Google," Cramer said on CNBC's "Squawk on the Street." "I think that [AOL CEO] Tim Armstrong will be very happy because [Verizon CEO] Lowell McAdam … will let him do what he wants, which is to develop great programming and have a tremendous ad distribution platform. This is a brilliant move by Tim."

Cramer made his remarks after Verizon announced it will buy AOL for $50 per share, or about $4.4 billion by this summer. 

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Armstrong said this was the next step for the company to continue growing.

"If you look at AOL over the last five years ... we turned the company around. We outperformed the S&P 500 for the last five years, and when you look at where we are today and where we're going, we've made AOL as big as it can possibly be in today's landscape," he said in a CNBC "Squawk Box" interview after the announcement. "But if you look forward five years, you're going to be in a space where there are going to be massive, global-scale networks, and there's no better partner for us to go forward with than Verizon."

DISCLOSURE: Cramer's trust owned Google stock when this article was published.

Verizon's $4.4 billion deal to acquire AOL is the latest entry in the 25-plus year history of a company that changed the way people access the Internet.

Some highlights:

  • 1989: Quantum Computer services launches its first instant messaging service.
  • 1991: After an employee vote, Quantum renames itself America Online, also known as AOL.
  • 1992: AOL goes public.
  • 1993: AOL starts mailing compact discs to homes to help them get online.
  • 1995: The service reaches 1 million members.
  • 1996: AOL reaches 5 million members.
  • 1998: The company buys online service CompuServe and messaging platform ICQ.
  • 1999: AOL buys Moviefone and Internet browser Netscape.
  • 2001: AOL merges with Time Warner to form the media giant AOL Time Warner.
  • 2006: America Online formally changes its name and begins offering services for free.
  • 2009: Time Warner spins off AOL into a separate company.
  • 2011: AOL buys The Huffington Post.
  • 2014: Activist investor Starboard urges AOL, Yahoo to merge.
  • April 27, 2015: AOL CEO Tim Armstrong says speculated Yahoo deal is a "dead notion."
  • May 12, 2015: Verizon announces $4.4 billion deal to buy AOL.

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