Wednesday, May 13, 2015

Verizon: Is AOL Worth The Cash?


Summary

  • Verizon agreed to purchase AOL for $4.4 billion in cash.
  • The deal adds debt to an already large debt load.
  • AOL doesn't appear to add the exciting assets suggested by the press release with the company offering limited growth.
  • At this point, any deal adding debt isn't appealing, but the materiality of the deal doesn't adjust a breakout forecast for Verizon's stock.
The validity of Verizon Communications (NYSE:VZ) purchasing AOL (NYSE:AOL) is very much a debate, but the one part missing from those discussions is the use of cash for the deal. One of the biggest concerns with an investment in Verizon is the debt load created from the transaction with Vodafone (NASDAQ:VOD). The basis of the AOL deal is better sculpted on whether it is worth the cash.

Read the full article at Seeking Alpha.


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