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June 29, 2012

AOL makes plans to buy back $400m in stock

AOL makes moves to return to its shareholders proceeds from its $1.1bn patent sale to Microsoft with a ‘Dutch auction’ tender offer to buy back $400m (£258m) in stock.

By Tineka Smith

Photo Credit: Jason Persse

AOL plans to return to shareholders in 2012 $1.1bn and shareholders will have the chance to tender some or all of their shares from $27.00 to $30.00 per share.

"Today’s announcement is an important first step in returning 100% of the proceeds from our patent transaction as expediently and tax efficiently as possible," said Tim Armstrong, Chairman and CEO of AOL. "AOL is focused on continued execution and operational improvement. Concurrently reducing our shares outstanding at attractive prices underscores both financial prudence and our significant belief in the opportunity in front of AOL."

AOL signed a deal to sell over 800 of the company’s patents and 1,100 related patent applications to Microsoft for $1.056bn in April 2012. The company plans to return all of the proceeds of the deal to shareholders through share buy backs, open market repurchases, or a tender offer.

The company is confident that by having different ways to return the patent proceeds shareholders should have 100% of the proceeds by the end of 2012 without affecting valuable tax attributes.

"Today’s announcement is a necessary first step in the return of capital to our shareholders," said Artie Minson, CFO of AOL and President of AOL Services "Over the course of the remainder of this year, we will continue the full return of the patent proceeds as well as the $40 million left in our current repurchase authorization and we will do so in a manner which we believe will drive value for shareholders while preserving the value of AOL’s substantial tax assets."

Please follow this author on Twitter @Tineka_S or comment below.

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