By Ronan Shields and Kayleigh Barber • August 1, 2024 •
Ivy Liu
After weeks of speculation, Outbrain has confirmed its purchase today of Teads in a deal valuing the acquisition target at just north of $1 billion, denoting a significant episode in the latest revival of mergers and acquisitions in the ad tech sector.
A news release containing details of the transaction notes how it will consist of two tranches: a $725 million upfront payment, then $25 million in a deferred payment, financed through its existing cash resources and outside financing (more on that below).
The deal will see 35 million Outbrain shares of common stock issued to Altice, the Europe-based telco that paid a reported $305 million for Teads in 2017, with the transaction additionally consisting of $105 million of convertible preferred equity, according to the August 1 news release.
Talks between the content recommendation company Outbrain and Teads, a video ad tech specialist that has historically dealt with brand advertisers, have been previously reported, which subsequently raised questions over the structure of such a deal.
Outbrain intends to finance the transaction with existing cash resources and $750 million in committed debt financing from Goldman Sachs, Jefferies Finance, and Mizuho Bank. Furthermore, the 35 million Outbrain shares issued to Altice are valued at approximately $169 million given the average monthly price of its common stock as of July 30, ($4.82), according to the release.
The transaction has been approved by the board of both Outbrain and Teads, and is expected to close in the first quarter of 2025, pending customary closing conditions, with David Kostman (Outbrain’s CEO) in line to serve as CEO of the combined company.
The union will unite two of the most recognizable names in the ad tech sector. Outbrain is a noted player in the performance advertising space, albeit it has been making efforts to concentrate on more premium offerings after its July 2021 initial public offering.
Meanwhile, Teads which had been on the hunt for such a deal since late last year according to reports, made its name in the online video space with a burgeoning footprint in the CTV space, according to the company.
Speaking with Digiday, Outbrain’s Kostman described the deal as a “merger of similar sized companies.” adding that both brought complimentary assets to the union.
“We bring performance, they bring brand and video both creative categories,” he added. “Combining the two best-in-class businesses with video branding solutions is a great value proposition.”
This is a developing story.
https://digiday.com/?p=551522
