AOL to Acquire MovieFone in $388-Million Stock Deal

America Online said Monday it will buy the movie listing and ticketing company MovieFone in a stock deal worth about $388 million in an effort to attract more users to its locally oriented Web sites and cash in on the electronic commerce boom.

By acquiring the company that operates the popular 777-FILM telephone listing service--and its companion Web site, MovieLink--AOL expects to promote its brand to millions of people who aren’t already online, said Barry Schuler, president of AOL Interactive Services. MovieFone served more than 100 million customers last year and covers more than 70% of the country’s moviegoing audience.

In the short term, Dulles, Va.-based AOL expects the movie listing service--to be renamed AOL MovieFone--to mesh well with its proprietary online service and its Web offerings, especially its collection of Digital City sites, Schuler said.

Longer term, America Online could expand the service to boost revenues from e-commerce.

“We could get into ticketing for all kinds of events,” Schuler said.

MovieFone Chief Executive Andrew Jarecki and his three co-founders will continue to run the New York-based company, which also has operations in Los Angeles. Jarecki’s family controls more than 90% of the company’s voting stock.

Each MovieFone share will be exchanged for between 0.1670 and 0.2259 shares of AOL common stock in a tax-free pooling of interests valued at about $388 million based on Friday’s closing price for AOL. The exact exchange ratio will be determined by dividing $29.25 by AOL’s average share price during a specified period prior to the merger’s effective date in late spring, the company said. That would put the per-share value of the deal in the $30 range.

MovieFone shares hit a 52-week high of $33 in Nasdaq trading Monday before closing at $26.50, up $1.50. America Online shares lost $4.56 to close at $171.19 on the New York Stock Exchange.