AOL Announces the Commencement of a $400 Million Modified Dutch Auction Tender Offer for its Common Stock

  AOL Announces the Commencement of a $400 Million Modified Dutch Auction
  Tender Offer for its Common Stock

     ANNOUNCEMENT MARKS AOL’S FIRST STEP IN RETURNING 100% OF THE PATENT
           TRANSACTION PROCEEDS TO SHAREHOLDERS BY THE END OF 2012

Business Wire

NEW YORK -- June 28, 2012

AOL Inc. (NYSE: AOL) (“AOL” or the “Company”) announced today that it has
commenced a modified “Dutch auction” tender offer to repurchase shares of its
common stock up to an aggregate purchase price of $400 million. The $400
million aggregate purchase price of shares of common stock sought in the
tender offer includes the approximately $40 million remaining from the initial
$250 million stock repurchase authorized in August of 2011 and brings the
total amount AOL intends to return to shareholders in 2012 to approximately
$1.1 billion. The tender offer begins today, June 28, 2012, and will expire at
5:00 p.m., New York City time, on August 2, 2012, unless extended or earlier
terminated by the Company. Under the terms of the proposed tender offer, AOL’s
shareholders will have the opportunity to tender some or all of their shares
at a price within the range of $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.”

“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.”

AOL intends to return 100% of the proceeds from the sale to Microsoft
Corporation of over 800 of the Company’s patents and their related patent
applications to shareholders. Currently, AOL’s preferred method of returning
the proceeds is via a share buy-back either through open market repurchases or
a tender offer. However, due to the size of the buy-back relative to our
current market capitalization and our desire to preserve our large tax
attributes which could be diminished should we trigger a “change of control”
as defined by Section 382 of the Internal Revenue Code of 1986, as amended,
the Company needs to approach the 100% return of the patent proceeds in
multiple steps and potentially through several methods. These methods could
include a tender offer, share repurchases in the open market,
privately-negotiated transactions and the payment of dividends. We are
confident that given the different alternatives of returning the patent
proceeds to shareholders we can return 100% of the proceeds by year-end 2012
without affecting our valuable tax attributes.

Based on the number of shares tendered and the prices specified by the
tendering shareholders, AOL will determine the lowest per share price within
the range of tenders that will enable the Company to buy $400 million in
shares, or such lower amount depending on the number of shares that are
properly tendered and not properly withdrawn. All shares accepted for payment
will be paid the same price, regardless of whether a shareholder tendered such
shares at a lower price within the range. If the tender offer is fully
subscribed, then shares of common stock having an aggregate purchase price of
$400 million will be purchased, representing approximately 15.8 percent to
14.2 percent of AOL’s issued and outstanding shares as of June 14, 2012,
depending on the purchase price payable for those shares pursuant to the
tender offer.

Shareholders who have questions may call Allen & Company, LLC, the dealer
manager for the tender offer. The information agent for the tender offer is
Georgeson Inc. and the depositary is Computershare. The offer to purchase, the
related letter of transmittal, and the other tender offer materials will be
mailed to AOL shareholders shortly after commencement of the tender offer.
Shareholders who have questions or would like additional copies of the tender
offer documents, when available, may call the information agent at (877)
278-8941. Banks and brokers may call (212) 440-9800.

While AOL’s Board of Directors has approved the making of the tender offer,
none of AOL, its Board of Directors, the dealer manager, the depositary, or
the information agent make any recommendation to any shareholder as to whether
to tender or refrain from tendering any shares or as to the price or prices at
which shareholders may choose to tender their shares. AOL has not authorized
any person to make any such recommendation. Shareholders must decide whether
to tender their shares and, if so, how many shares to tender and at what price
or prices. In doing so, shareholders should carefully evaluate all of the
information in the offer to purchase, the related letter of transmittal, and
the other tender offer materials, when available, before making any decision
with respect to the tender offer, and should consult their own financial and
tax advisors.

The offer to purchase, the related letter of transmittal and the other tender
offer materials will be mailed to AOL shareholders shortly. Shareholders
should read those materials carefully when they become available because they
will contain important information, including the terms and conditions of the
tender offer. AOL’s directors and executive officers do not intend to tender
their shares in the tender offer.

About AOL Inc.

AOL Inc. (NYSE: AOL) is a brand company, committed to continuously innovating,
growing, and investing in brands and experiences that inform, entertain, and
connect the world. The home of a world-class collection of premium brands, AOL
creates original content that engages audiences on a local and global scale.
AOL helps marketers connect with these audiences through effective and
engaging digital advertising solutions.

From time to time, AOL posts information about the Company on its investor
relations website (http://ir.aol.com) and its official corporate blog
(http://blog.aol.com).

Tender Offer Statement

This press release is for informational purposes only and is neither an offer
to buy nor the solicitation of an offer to sell, any shares of AOL’s common
stock. The tender offer will be made only pursuant to the offer to purchase,
the related letter of transmittal and the other tender offer materials, which
will be mailed to shareholders upon commencement of the tender offer.
Shareholders should read the offer to purchase, the related letter of
transmittal and the other tender offer materials carefully when they become
available because they will contain important information, including the terms
and conditions of the tender offer and complete instructions on how to tender
shares of AOL’s common stock. AOL is filing a Tender Offer Statement on
Schedule TO with the Securities and Exchange Commission (the “SEC”) that
includes the offer to purchase, the related letter of transmittal and the
other tender offer materials. Shareholders may obtain free copies of the offer
to purchase, the related letter of transmittal and the other tender offer
materials once filed with the SEC at the SEC’s website at www.sec.gov

Forward-Looking Statements

This release may contain “forward-looking statements” within the meaning of
the federal securities laws, including statements concerning anticipated
future events and expectations that are not historical facts. Words such as
“anticipates,” “estimates,” “expects,” “projects,” “forecasts,” “intends,”
“plans,” “will,” “believes” and words and terms of similar substance used in
connection with any discussion of future operating or financial performance
identify forward-looking statements. These forward-looking statements are
based on management’s current expectations and beliefs about future events. As
with any projection or forecast, they are inherently susceptible to
uncertainty and changes in circumstances. Except as required by law, we are
under no obligation to, and expressly disclaim any obligation to, update or
alter any forward-looking statements whether as a result of such changes, new
information, subsequent events or otherwise. Various factors could adversely
affect our operations, business or financial results in the future and cause
our actual results to differ materially from those contained in the
forward-looking statements, including those factors discussed in detail in the
“Risk Factors” section contained in our Annual Report on Form 10-K for the
year ended December 31, 2011 (the “Annual Report”), filed with the SEC. In
addition, we operate a web services company in a highly competitive, rapidly
changing and consumer- and technology-driven industry. This industry is
affected by government regulation, economic, strategic, political and social
conditions, consumer response to new and existing products and services,
technological developments and, particularly in view of new technologies, the
continued ability to protect intellectual property rights. Our actual results
could differ materially from management’s expectations because of changes in
such factors. Achieving our business and financial objectives, including
growth in operations and maintenance of a strong balance sheet and liquidity
position, could be adversely affected by the factors discussed or referenced
under the “Risk Factors” section contained in the Annual Report as well as,
among other things: 1) our ability to complete the tender offer; 2) the price
at which we ultimately determine to purchase shares in the tender offer and
the number of shares properly tendered in the tender offer; 3) the price and
time at which we make any additional share repurchases following completion of
the tender offer, the number of shares acquired in such repurchases and the
terms, timing and costs of such repurchases; 4) fluctuations in the market
price of our shares; 5) changes in our plans, strategies and intentions; 6)
continual decline in market valuations associated with our cash flows and
revenues; 7) the impact of significant acquisitions, dispositions and other
similar transactions; 8) our ability to attract and retain key employees; 9)
any negative unintended consequences of cost reductions, restructuring actions
or similar efforts, including with respect to any associated savings, charges
or other amounts; 10) market adoption of new products and services; 11) the
failure to meet earnings expectations; 12) asset impairments; 13) decreased
liquidity in the capital markets; 14) our ability to access the capital
markets for debt securities or bank financings; and 15) the impact of
“cyber-warfare” or terrorist acts and hostilities or of security breaches or
privacy concerns.

Contact:

AOL Inc.
Media
Maureen Sullivan, 212-206-5030
Maureen.Sullivan@teamaol.com
or
Investor Relations
Eoin Ryan, 212-206-5025
Eoin.Ryan@teamaol.com