Verizon’s AOL to buy Millennial Media

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Baltimore-based Millennial Media Inc. and its mobile advertising platform will be acquired for $250 million by communications giant  Verizon Communications Inc.’s AOL Inc.

The communications giant announced the $1.75-per-share offer Thursday morning. The purchase is seen as an effort by Verizon to bolster its challenge to Google Inc. in mobile advertising.

Verizon will make its mobile video-streaming service, called Go90, widely available in coming days, according to a person familiar with the situation. With Baltimore-based Millennial, it will be able to deliver more targeted ads to subscribers on their smartphones. The deal also gives Verizon more stake in a mobile ad market dominated by Facebook Inc. and Google. Verizon bought AOL for $4 billion in June, partly for AOL’s programmatic-ad technology.

Christine Feeney, a spokeswoman for Millennial Media, did not return a reporter’s call seeking comment.

Millennial, founded in 2006, has focused on the development of advertising platforms for mobile devices.

A recent study produced by the company earlier this year concluded that mobile and tablet use surpassed computer use last year. Mobile advertising budgets are expected to surpass online advertising by next year.

But despite this projection for growth, Millennial has yet to see its profits follow suit.

In August, the company posted a net loss of $15.5 million for the second quarter.

The $1.75-a-share offer is a 31 percent premium to Millennial’s price at Wednesday’s close. The transaction, which had been rumored for months, will be in the form of a tender offer followed by a merger, New York- based AOL said Thursday in a statement.

Millennial shares climbed 30 percent to $1.74 Thursday. Verizon shares rose 0.35 percent to $45.70.

Traditional telecommunications companies like Verizon are working to gain a bigger foothold in the mobile video and advertising world as consumer habits move in that direction. More than 60 percent of digital media consumption in the U.S. happens on mobile devices, according to a 2014 survey from ComScore.

Millennial, whose Chief Executive Officer Michael Barrett was previously Yahoo Inc.’s chief revenue officer, had an adjusted net loss of $83 million on $296.2 million in sales last year.

Goldman Sachs Group Inc. advised AOL, while Luma Partners LLC provided financial advice to Millennial.