Verizon Communications Inc. (NYSE: VZ) agreed to buy AOL, Inc. (NYSE: AOL) in a $4.4 billion all-cash-deal that will further the largest U.S wireless firms growth ambitions in mobile and video advertising.

Following the announcement, in today’s pre-market, AOL shares soared nearly 18%, while Verizon’s stock dropped about 1.6%.

Verizon’s offer at 17% premium

Verizon Communications Inc said Tuesday that it will pay $50 a share for AOL, representing a 17% premium over AOL’s stock price on Monday. The all-cash deal represents a 23% premium over AOL’s three-month volume-weighted average price.

The announcement is a major part of the wireless giant’s effort to build digital and video platforms. The firm has set its sights on entering the crowded online video marketplace, so access to advanced technology AOL has developed for selling ads and delivering high-quality Web video will be valuable. The latest agreement will also support and connect to Verizon’s IoT (Internet of Things) platforms, creating a growth platform from wireless to IoT for consumers and businesses.

Verizon like rival AT&T Inc. believes video will be a primary driver of demand for its wireless network in the years ahead. As U.S. wireless business has matured in recent years, carriers like Verizon, AT&T Inc. and Sprint Corporation (NYSE: S) Corp increasingly fighting to garner market share from one another. Verizon clocked $127 billion in revenue and profit of $12 billion last year. Offering digital video over wireless connections represents a growth opportunity for Verizon in the future.

Verizon in series of acquisitions

As reported by ValueWalk, last year Verizon Communications made it three in a row with its acquisition of the assets of Intel Corporation (NASDAQ: INTC) Media, an Intel Corporation unit developing Cloud TV products and services that enables the delivery of TV signals ‘over the top’. In November 2013, the wireless giant acquired Uplynk, a provider of a video streaming solution that works by simplifying the whole process of online video delivery and uses a single adaptive format for all computers and devices.

In December 2013, the firm acquired Edgecast, a leader in the content delivery network space, to strengthen its video delivery and Web services capabilities. These acquisitions will help Verizon Communications Inc. integrate a web-based TV service with its FioS – a bundled Internet access, telephone, and TV service that runs on a fiber-optic communications network.

Last January, ValueWalk highlighted Verizon had approached AOL, Inc. for a potential acquisition or joint venture to enhance its mobile-video offerings.

Acquisition to facilitate cross-screen connection

In a statement on Tuesday, Lowell McAdam, Verizon chairman and CEO said: “Verizon’s vision is to provide customers with a premium digital experience based on a global multiscreen network platform. This acquisition supports our strategy to provide a cross-screen connection for consumers, creators and advertisers to deliver that premium customer experience.”

McAdam continued: “AOL has once again become a digital trailblazer, and we are excited at the prospect of charting a new course together in the digitally connected world. At Verizon, we’ve been strategically investing in emerging technology, including Verizon Digital Media Services and OTT,  that taps into the market shift to digital content and advertising. AOL’s advertising model aligns with this approach, and the advertising platform provides a key tool for us to develop future revenue streams.”

The latest acquisition will give Verizon a number of valuable digital assets, including AOL Autos, Huffington Post, Movie Phone, Techcrunch, Mapquest and Engadget.

Verizon had earlier indicated plans to launch its own mobile video service later this year. Following today’s announcement, the wireless giant will now be adding AOL content to that offering, as AOL has been making original video for a number of years, often viral and reality TV based.

AOL started life as an internet provider selling dial-up access. However, in one of the most disastrous corporate mergers ever, its $183 billion megamerger with Time Warner Inc (NYSE: TWX) Inc. in 2000, the firm’s value shrank after the dot-com bust and ultimately the girms demerged when AOL was spun off as a separate company.

The latest deal, which includes about $300 million of AOL debt, will take the form of a tender offer followed by a merger, with AOL becoming a wholly owned subsidiary of Verizon. The deal is anticipated to close this summer, pending regulatory approval. Verizon anticipates financing the acquisition through cash on hand and commercial paper.

AOL chief Tim Armstrong, a former Google Inc (NASDAQ: GOOG) (NASDAQ: GOOGL) executive, has spearheaded AOL’s transformation since 2009. Under his leadership, AOL has invested heavily in ad technology, including an automated or “programmatic” platform that allows marketers to bid for inventory electronically. In 2013, AOL purchased Adap.tv, an “exchange” that connects buyers and sellers of online video advertising. Armstrong will continue to lead the company after the sale to Verizon.

AOL brought in revenue of $2.5 billion in 2014, about 9% higher than the previous year, and had profits of $126 million. However, the firm has been struggling recently to increase ad sales for its various properties.