AOL is handing majority ownership of Patch, a money-losing network of local news websites, to New York investment firm and turnaround specialist Hale Global in a joint venture announced by the companies on Wednesday.
AOL will transfer Patch to a new limited-liability company run by Hale Global. AOL will retain a minority interest.
Terms of the deal were not disclosed.
Hale Global is a 13-year-old firm that specializes in turning around online media, mobile and advertising companies.
The partnership is the latest chapter in the history of Patch, a network of more than 900 websites covering events and news in communities such as Montclair, NJ, and Malibu, Calif., that AOL Chief Executive Tim Armstrong helped start.
Investors and analysts have long urged AOL to stop pouring funds — so far totaling hundreds of millions of dollars — into Patch with little return.
The costly project was one reason that activist hedge fund Starboard Value took a position in AOL and tried to win seats on the board in an ultimately unsuccessful proxy battle.
“AOL has delivered on our commitment to our investors and put Patch in a position to be successful,” Armstrong wrote in a memo to employees.
Armstrong had promised that it would become profitable in 2013. To reach that goal, Patch slashed the staff of 1,000 by half late last summer and launched a search for either a partner or a buyer.
It’s unclear how Hale Global plans to structure Patch and whether there will be further layoffs.
AOL shares gained 2.1 percent to $48.25, after closing at all-time high on Tuesday.