AOL, now owned by Verizon Communications Inc., has agreed to buy mobile advertising company Millennial Media Inc. for about $250 million, a move to grow its app monetization services.

The offer of $1.75 a share is a 31% premium to Millennial Media's closing price on Wednesday of $1.34 a share.

Shares of Millennial Media, down 16% this year, traded up to $1.74 a share in premarket trading.

Deal talks between the two companies had been reported in July.

Millennial Media is one of a handful of companies that sells mobile ads across numerous websites and apps, saying it has the potential to deliver ads to more than 65,000 apps. The company went public in 2012 at $13 a share, but its stock has been pummeled as losses have piled up. Meanwhile, Google Inc. and Facebook Inc. have dominated mobile advertising in terms of market share.

More recently, Millennial has begun embracing automated, or programmatic, ad selling— a major focus of AOL's rebirth even before it was acquired by Verizon this year. With Millennial, AOL may be able to take its own consumer data, blend it with Verizon's rich set of data from its wireless customers, and create a powerful ad targeting offering for mobile devices.

AOL said it expects the deal will add scale to its mobile brand advertising options and to accelerate its position in markets such as Singapore, Japan, and Germany.

"As we continue to invest in our platforms and technology, the acquisition of Millennial Media accelerates our competitive mobile offering in ONE by AOL and enhances our current publisher offering with an 'all in' monetization platform for app developers," said AOL President Bob Lord in a news release.

The deal is expected to close in the fall.

Verizon agreed in May to buy AOL in a $4.4 billion deal aimed at advancing the telecom giant's growth ambitions in mobile video and advertising. AOL has advanced technology for selling ads and delivering high-quality Web video.

Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com

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(END) Dow Jones Newswires

September 03, 2015 08:55 ET (12:55 GMT)

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