Can AOL Get a Higher Offer?

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Tuesday morning’s announcement that Verizon Communications Inc. (NYSE: VZ) will acquire AOL Inc. (NYSE: AOL) may have been a surprise, but probably not a big surprise. What would be a second surprise would be the lack of a competing offer for AOL. And AOL’s board may have to consider it, if it is high enough.

Shortly after the opening bell, AOL’s stock traded above Verizon’s offer price, and at a new 52-week high. AOL stock had risen from around $37 a share a year ago to over $42 a share at Monday’s close, and following a jump of more than 10% after AOL reported first-quarter earnings last Friday.

AOL’s global advertising revenues rose 12% year-over-year in the first quarter and the number of U.S. average monthly visitors to AOL’s platforms also rose 12%. With both revenues and visitor numbers growing, AOL had made itself an attractive target for wireless companies, cable companies and satellite companies looking to expand into content for a reasonable price.

More interesting to potential acquirers, perhaps, is AOL’s position as an online video content property, where it ranks third behind Google Inc. (NASDAQ: GOOGL) sites and Facebook Inc. (NASDAQ: FB) with nearly 67 million unique viewers in February of this year. AOL’s video ad platform ranks fourth with a reach of 39.7% of the U.S. population.

Wall Street likes — or should like — AOL’s ad platform and the position it has carved out for itself in the online video space, a sector that Verizon noted in its announcement is a potential $600 billion global advertising industry.

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At $50 a share and a total of $4.4 billion, Verizon’s offer is certainly open to some competition. AT&T Inc. (NYSE: T) may be distracted by its proposed acquisition of DirecTV (NASDAQ: DTV) and will not make a competing bid, but Comcast Corp. (NASDAQ: CMCSA), which recently withdrew its $42 billion offer for Time Warner Cable Inc. (NYSE: TWC), may see another opportunity here, even though it would be a much smaller deal than the failed bid for Time Warner.

Whether a competitive bid will materialize is purely speculative, but it might be even more surprising if another offer is not forthcoming. There are not a lot of opportunities like this out there.