Netherlands-based global telecom company Altice NV (AMS: ATC, ATCB), founded and headed by French-Israeli billionaire Patrick Drahi, said it agreed to acquire Teads, a leading global online video advertising marketplace with an audience of more than 1.2 billion unique visitors including 720 million via mobile.
The deal values Teads at an enterprise value of up to €285 million on a cash and debt free basis. Teads announced record results for 2016, reporting 44% organic revenue growth year over year. The company was EBITDA positive for the fourth year in a row. Since Teads spends only a nominal amount on capital expenditures, the acquisition is immediately accretive to Altice’s operating free cash flow before taking into account the expected synergies and strategic benefits of the transaction.
The purchase price is subject to Teads achieving certain revenue targets in 2017. 75% of the acquisition purchase price will be due at closing. The remaining 25% earn-out is subject to Teads’ 2017 revenue performance and will become payable in early 2018.
Altice is a multinational cable, fiber, telecommunications, contents, media and advertising company with presence in four regions, Western Europe (comprising France, Portugal and Switzerland), the United States, Israel, and the Overseas Territories, currently comprising the French Caribbean, the Indian Ocean regions and the Dominican Republic. Altice the second largest telecom company in France, behind Orange.
Teads, founded in 2011, is the inventor of outstream video advertising and No. 1 video advertising marketplace in the world. Publishers work with Teads to create brand new video inventory and manage their existing inventory, monetizing it through their own sales force, Teads sales force, or programmatic buying.
Teads’ native video advertising solutions encompass a series of formats inserted deep into media content, like the inRead playing inside articles. It is changing the game within the video advertising market by creating unprecedented levels of premium inventory, which did not exist before.
Brands and agencies can access this top-tier, premium inventory, available on the web and on mobile, through programmatic or managed services. Through its managed services capabilities, the Teads team execute on their clients behalf using its platform.
Teads revenue grew by 44% in 2016 to an estimated €187.7 million.
“Convergence of telecoms, content, and advertising is at the core of our business. There is significant incremental value to be generated from our assets,” said Michel Combes, CEO of Altice. “Teads, a powerful business in itself, with major presence in Altice footprint notably in the U.S. and France, will enable us to offer a truly unique value proposition to brands and agencies on the one hand and the media industry, programmers and distributors on the other. It is that value proposition – data-driven, measurable and multiscreen – which will enable us to significantly grow our advertising business.”
“We are excited to start this new phase of Teads and become part of the internationally renowned Altice team,” said Pierre Chappaz, Founder and Executive Chairman of Teads. “As part of Altice, we will be able to offer even more tailored, data-driven solutions and take our value proposition from the digital world to a multiscreen platform, which includes TV, digital, mobile and tablets.”
The senior management of Teads, including Executive Chairman Pierre Chappaz and Chief Executive Officer Bertrand Quesada, will continue to lead the business going forward and have agreed to reinvest a significant portion of their proceeds. Pierre Chappaz will join Altice’s Management Board responsible for all of its advertising activities.
The deal is subject to certain competition reviews and is expected to close in mid-2017.
Photo: Patrick Drahi, Founder of Altice.