--AOL Inc. (AOL) unveiled plans to buy back $400 million worth of its shares --First step in returning to shareholders all of the proceeds of its $1.1 billion patent sale to Microsoft Corp. --Modified "Dutch auction" tender offer will include $40 million from the previous $250 million buyback the company announced last August. AOL Inc. (AOL) unveiled plans to buy back $400 million worth of its shares, billing it as the first step in returning to shareholders all of the proceeds of its $1.1 billion patent sale to Microsoft Corp. (MSFT). The so-called modified "Dutch auction" tender offer will include $40 million from the previous $250 million buyback the company announced last August. It begins Thursday and will run through 5 p.m. on Aug. 2. Under the terms of the offer, shareholders will be able to tender some or all of their shares at a price between $27 and $30 per share. AOL closed Wednesday at $27.31. AOL executives emphasized the buyback was just the beginning of the return of the patent proceeds, but said it needed to employ several steps and potentially several methods of returning the money to limit the tax impact. These methods could include tender offer, buyback in the open market, privately negotiated transactions and dividend payments, they said. "Today's announcement is a necessary first stop in the return of capital to our shareholders," said Artie Minson, AOL's chief financial officer, in a statement. At the company's last earnings call, AOL Chief Executive Tim Armstrong pledged to return all of the proceeds of the patent sale to shareholders. That promise very likely helped him win a proxy fight during the company's annual meeting earlier this month, analysts said. But he did not make that pledge until after the dissident shareholder, Starboard Value LP, publicly demanded it. Starboard nominated three board members, all of whom were defeated. Write Keach Hagey at keach.hagey@wsj.com
