America Online 2015 Annual Report Download - page 37

Other
Acquisition of AOL Inc.
On May12, 2015, we entered into the Merger Agreement with AOL
pursuant to which we commenced a tender offer to acquire all of the
outstanding shares of common stock of AOL at a price of $50.00 per
share, net to the seller in cash, without interest and less any applicable
withholding taxes.
On June23, 2015, we completed the tender offer and merger, and
AOL became a wholly-owned subsidiary of Verizon. The aggregate
cash consideration paid by Verizon at the closing of these transactions
was approximately $3.8billion. Holders of approximately 6.6million
shares exercised their appraisal rights under Delaware law. If they
had not exercised these rights, Verizon would have paid an additional
$330million for such shares at the closing.
AOL is a leader in the digital content and advertising platform space.
Verizon has been investing in emerging technology that taps into the
market shift to digital content and advertising. AOL’s business model
aligns with this approach, and we believe that its combination of owned
and operated content properties plus a digital advertising platform
enhances our ability to further develop future revenue streams.
See Note2 to the consolidated financial statements for additional
information.
Other
On September3, 2015, AOL announced an agreement to acquire an
advertising technology business for cash consideration that was not
significant. The transaction was completed in October 2015.
During the fourth quarter of 2014, Redbox Instant by Verizon, a venture
between Verizon and Redbox Automated Retail, LLC (Redbox), a
wholly-owned subsidiary of Outerwall Inc., ceased providing service to
its customers. In accordance with an agreement between the parties,
Redbox withdrew from the venture on October20, 2014 and Verizon
wound down and dissolved the venture during the fourth quarter
of 2014. As a result of the termination of the venture, we recorded a
pre-tax loss of $0.1billion in the fourth quarter of 2014.
During February 2014, Verizon acquired a business dedicated to
the development of IP television for cash consideration that was not
significant.
During the fourth quarter of 2013, Verizon acquired an industry leader
in content delivery networks for $0.4billion.
See Note2 to the consolidated financial statements for additional
information.
Cautionary Statement Concerning
Forward- Looking Statements
In this report we have made forward- looking statements. These state-
ments are based on our estimates and assumptions and are subject
to risks and uncertainties. Forward- looking statements include the
information concerning our possible or assumed future results of oper-
ations. Forward- looking statements also include those preceded or
followed by the words “anticipates,” “believes,” “estimates,” “hopes” or
similar expressions. For those statements, we claim the protection of
the safe harbor for forward- looking statements contained in the Private
Securities Litigation Reform Act of 1995.
The following important factors, along with those discussed elsewhere
in this report and in other filings with the Securities and Exchange
Commission (SEC), could affect future results and could cause those
results to differ materially from those expressed in the forward- looking
statements:
• adverse conditions in the U.S. and international economies;
• the effects of competition in the markets in which we operate;
• material changes in technology or technology substitution;
• disruption of our key suppliers’ provisioning of products or services;
• changes in the regulatory environment in which we operate,
including any increase in restrictions on our ability to operate
our networks;
• breaches of network or information technology security, natural
disasters, terrorist attacks or acts of war or significant litigation and
any resulting financial impact not covered by insurance;
• our high level of indebtedness;
• an adverse change in the ratings afforded our debt securities by
nationally accredited ratings organizations or adverse conditions in
the credit markets affecting the cost, including interest rates, and/or
availability of further financing;
• material adverse changes in labor matters, including labor negotia-
tions, and any resulting financial and/or operational impact;
• significant increases in benefit plan costs or lower investment
returns on plan assets;
• changes in tax laws or treaties, or in their interpretation;
• changes in accounting assumptions that regulatory agencies,
including the SEC, may require or that result from changes in the
accounting rules or their application, which could result in an impact
on earnings; and
• the inability to implement our business strategies.
35Verizon Communications Inc. and Subsidiaries
Management’s Discussion and Analysis ofFinancialCondition and Results of Operations continued