America Online, the world's largest online service, said on Monday it agreed to buy MovieFone, a telephone movie schedule service, for US$388 million in stock.
Under the agreement, MovieFone, which serves more than 100 million moviegoers a year, will operate under the name AOL MovieFone and would become a key component of the company's online service, AOL said.
The purchase would significantly boost AOL's forte in providing entertainment listings, a big draw for advertising dollars.
MovieFone shareholders would receive AOL stock worth $29.25 per share. The exact fraction has not been worked out, but it will range between 0.1670 and 0.2259 of an AOL share.
AOL (AOL) shares ended $4.50 lower at $171.19 in New York Stock Exchange trading, while MovieFone (MOFN) was up $1.50 at $26.50 on the Nasdaq.
AOL said it expects the transaction to be accounted for as a pooling of interests. It will put MovieFone on Digital Cities, a section of AOL that provides local weather reports, news, and entertainment listings for several US cities.
MovieFone's board of directors recommended that shareholders vote to approve the acquisition. The company's controlling stockholders have already agreed to vote in favor of the deal, AOL said.
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