AOL to pay $500 million in one-time dividend

  @CNNMoneyInvest August 27, 2012: 10:42 AM ET
AOL Dividend

AOL announced a $500 million special dividend Monday.

NEW YORK (CNNMoney)

AOL announced a $500 million one-time dividend Monday as part of a plan to distribute $1.1 billion in cash to shareholders, a defensive move for the Internet company that fought off a challenge by an activist shareholder earlier this year.

AOL (AOL) said it will pay $5.15 a share to shareholders of record on Dec. 5. The company also announced a $600 million accelerated share repurchase agreement with Barclays Bank (BCS).

Shares of AOL jumped 93 cents, or 2.8%, to $33.85 in early trading Monday. Its shares have more than doubled in value so far this year.

Related: Microsoft selling some AOL patents to Facebook

In April, AOL reached a deal to sell 800 patents to Microsoft (MSFT, Fortune 500) for $1.06 billion. The company said at the time that it intended "to return a significant portion of the sale proceeds to shareholders."

But even before reaching that deal, activist shareholder group Starboard Value LP, had been pushing for AOL to sell its patents and return cash to shareholders through a share repurchase and dividend.

Starboard was particularly critical of large purchases the company has made -- including the $315 million it spent for the Huffington Post -- since AOL was spun-off from Time Warner (TWX, Fortune 500) in 2009. Time Warner is the parent company of CNNMoney.

Starboard ran a slate of three directors for the company's eight board positions, but it failed in those efforts. Since then it has cut its stake in AOL to 3.1% from its previous holding of 5.3% of the outstanding stock.

Worst may not be over for Facebook

AOL also announced Monday it would ask shareholders for authority to impose new rules to deter any individual, individual fund or family of funds from acquiring a 4.9% or larger stake in the company.

AOL had already announced a $550 million share repurchase plan on Aug. 3.

Under the new share repurchase plan, AOL will increase the amount to $600 million and expects to receive shares throughout the remainder of the year, including about 4 million shares that Barclays will deliver to AOL on August 30.

To top of page



Join the Conversation
Markets
Sponsored by
Index Last Change % Change
Dow 16,400.64 -24.21 -0.15%
Nasdaq 4,086.90 0.67 0.02%
S&P 500 1,861.94 -0.37 -0.02%
Treasuries 2.70 0.07 2.54%
Data as of 12:25pm ET
Company Price Change % Change
Bank of America Corp... 16.22 0.09 0.56%
General Electric Co 26.74 0.62 2.37%
Facebook Inc 59.49 -0.23 -0.39%
Micron Technology In... 23.47 0.99 4.40%
Huntington Bancshare... 9.15 -0.16 -1.72%
Data as of 12:10pm ET
Overnight Avg Rate Latest Change Last Week
30 yr fixed4.41%4.44%
15 yr fixed3.33%3.31%
5/1 ARM3.34%3.55%
30 yr refi4.39%4.41%
15 yr refi3.31%3.30%
View rates in your area
 
Find personalized rates:
Rate data provided
by Bankrate.com
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.