CEO Tim Armstrong is following through on his vow to give back to shareholders all of the $1B+ that Microsoft recently paid for more than 800 AOL patents. In addition to previous share repurchases, the company says the new arrangement means it plans to return $1.1B this year to its investors. Reducing the number of shares “at attractive prices underscores both financial prudence and our significant belief in the opportunity in front of AOL,” Armstrong says. The sale will be conducted as a so-called modified Dutch auction, giving shareholders opportunities to sell their holdings at anywhere from $27 to $30 a share — although in the end everyone will receive the same price. If the offer is fully subscribed, then AOL’s repurchase could amount to as much as 15.8% of its outstanding shares. The stock closed yesterday at $27.31 and is up nearly 4% in pre-market trading. AOL says that it has to return the $1B from Microsoft in multiple stages to avoid a big tax hit. Allen & Co is managing the sale.