Israeli business Outbrain is buying Teads for $1 billion. The deal includes $725 million upfront cash, $25 million deferred cash, 35 million Outbrain common stock, and $105 million convertible preferred equity.
Outbrain’s stock trades at $4.90, worth $233 million. Teads’ owners own a large part in the amalgamated company in this unique high-tech leveraged acquisition. After the deal, Teads’ owner, Altice, will add two directors to Outbrain’s eight. Goldman Sachs, Jefferies, and other banks loaned Outbrain much to finance the deal.
After the merger, Outbrain CEO David Kostman will lead the combined firm, with Teads Co-CEOs Bertrand Quesada and Jeremy Arditi as Co-Presidents. The deal will establish a big online advertising opponent to Israeli startup Taboola, which Outbrain attempted to join with five years ago.
In 2024, the two companies should earn $660-680 million in revenues and $180-190 million in adjusted operating profit. The merged business expects synergies to boost adjusted operating profit by $50-60 million next year.
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Outbrain had cash holdings of $231 million at the end of the first quarter, thus the transaction will boost its leverage by more than $1 billion. Outbrain claimed $935 million in revenue at the end of 2023, whereas Teads recorded $820 million last year.
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Outbrain’s stock has fallen 76% since its 2021 IPO on Wall Street, mostly owing to poor growth and dwindling revenues. Outbrain announced the retirement of founder Yaron Galai, who had been joint CEO for 17 years. David Kostman, NICE chairman, is the sole CEO.
“This is a transformative transaction to establish a true end-to-end, full-funnel platform for the open internet,” said David Kostman, CEO of Outbrain. “The combination of our highly-complementary offerings accelerates our vision to become the preferred partner to deliver meaningful brand outcomes across premium, quality media environments — while scaling the industry-leading offerings Teads is known for. I’m incredibly proud of what our team at Outbrain has created, and strongly believe that with Teads we will build tremendous value for our customers, employees, and partners. I believe this combination and the transaction’s financial structure position Outbrain to deliver significant shareholder value in the years to come.”
Outbrain also increased its second-quarter 2024 prediction to $55-57 million in revenues and $6 million in adjusted operating profit from $53-57 million and $1-4 million, respectively.
About Teads
Teads is a prominent cloud-based, omnichannel technology that enables programmatic digital advertising across quality digital media worldwide. Teads’ modular platform lets partners use buy-side, sell-side, creative, data, and AI optimization technologies end-to-end.
About OutBrain
Outbrain is a premier technology platform that engages people online to boost business results.
