Italy’s Bending Spoon Acquires AOL From Apollo

Milan-based app developer Bending Spoons has agreed to acquire AOL from private equity firm Apollo, marking a significant expansion of its portfolio of established internet brands. While specific terms were not disclosed, Reuters previously reported an AOL valuation exceeding $1.4 billion, with Bending Spoons raising $2.8 billion in debt to finance this and future acquisitions. The acquisition aims to integrate AOL's substantial user base of 30 million monthly users and projected $400 million in annual revenue into Bending Spoons' growing operations, which are on track for $1.2 billion in revenue this year and recently secured $4 billion in debt and $155 million in equity funding.

Analysis

Bending Spoons, a Milan-based app developer, is acquiring AOL from private equity firm Apollo, marking a significant expansion of its portfolio of established internet brands. While specific terms remain undisclosed, Reuters previously reported an AOL valuation exceeding $1.4 billion. Bending Spoons is funding this acquisition, alongside future takeovers, by raising $2.8 billion in debt, adding to the $4 billion in debt and $155 million in equity already secured this year.

This acquisition aligns with Bending Spoons' strategy of revitalizing "aging American internet brands," following previous purchases like Evernote and Meetup. The company aims to integrate AOL's substantial user base of 30 million monthly users and projected $400 million in annual revenue into its operations, which are on track for $1.2 billion in revenue this year. CEO Luca Ferrari expressed intent to invest in AOL Mail's technology, aiming for a faster and more intuitive experience for its "loyal" customer base.

The deal underscores Bending Spoons' aggressive growth trajectory and its ability to secure substantial financing in private markets. Scottish fund manager Baillie Gifford's 89% markup of its investment in March, valuing Bending Spoons at over $4.9 billion, reflects strong investor confidence in its strategy and execution. The company's recent $1.38 billion deal to take Vimeo private further demonstrates its capacity for large-scale acquisitions and its expanding influence in the tech sector.

Key Decisions for Investors

• Investors with exposure to Bending Spoons should monitor its integration strategy for AOL and other recent acquisitions, given the substantial debt financing and ambitious growth targets.
• Apollo's successful divestment of AOL demonstrates effective asset management and monetization within its portfolio, potentially signaling capital availability for new private equity opportunities.
• The significant debt funding for Bending Spoons' acquisition spree indicates strong private credit market liquidity for growth-oriented tech M&A, warranting attention to leverage ratios and future cash flow generation.