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Outbrain (Nasdaq: OB) has agreed to acquire ad tech firm Teads from French telecom Altice for $1 billion. 

Why it matters: The deal is the latest split up between telco and ad tech and bolsters Outbrain's business as its stock struggles on the public market.

Context: Outbrain, best known for chumbox ads, went public in 2021 after a merger with its competitor Taboola fell apart. Its stock is down 76% since its public debut.

Founded in 2011, Teads specializes in buying and selling display and video ads in articles on desktop and mobile. It recently expanded to connected TV to better serve omnichannel marketing strategies.

Flashback: Altice acquired Teads in 2017 at a valuation of €285 million on a cash and debt free basis.It lauded the deal as part of a larger global ad strategy where it could leverage its subscriber data, but has struggled to find an exit as it seeks to pay down its heavy debt load.

Teads filed for an IPO in 2021, targeting a $5 billion valuation, but ultimately withdrew it. 

Then in 2023, Altice explored a sale for Teads at a valuation between €2.5 billion and €3 billion, per L'Informe and MergerMarket.

Zoom in: Outbrain said the deal offers a scaled platform across the open internet and connected TV that supports both brand and performance advertising. The combined company is estimated to manage more than $1.7 billion in ad spend in 2024.

The $1 billion transaction is a combination of $725 million upfront cash, $25 million deferred cash, 35 million shares of common stock of Outbrain, and $105 million of convertible preferred equity.

Outbrain said the deal will be financed through existing cash resources and $750 million in committed debt financing from Goldman Sachs Bank USA, Jefferies Finance and Mizuho Bank.

The combined companies are expected to generate gross profit of $660 million to $680 million, excluding traffic acquisition costs, and adjusted EBITDA of $180 million to $190 million in 2024. 

What's next: Outbrain CEO David Kostman will serve as CEO of the combined company, and Teads co-CEOs Bertrand Quesada and Jeremy Arditi will serve as co-presidents. Outbrain COO Asaf Porat will remain COO. Altice will appoint two new members to Outbrain's board. 

Outbrain's team of about 1,000 employees will combine with Teads' 1,200-person team.

Both companies' boards have approved the deal, and the transaction is expected to close in the first quarter of 2025, subject to Outbrain stockholder and regulatory approvals. 

What they're saying: Outbrain's Kostman tells Axios that this deal was one he "wanted to make happen" since he started at the company in 2014. 

"Combining these two companies creates a true end-to-end, full-funnel solution for the open internet that can compete with the walled gardens in terms of capabilities, data, targeting and value proposition for advertisers," Kostman says. "Scale matters in this industry." 

"It's a transformational milestone for our company from many perspectives, not least of which is scale, the combined scale," Teads' Arditi says. "The segment of the industry that Outbrain is in is one that we have been working on actively getting into, on the performance side."

Zoom out: Telecom and enterprise tech businesses have been shedding their ad tech and media assets in recent years as they failed to achieve intended financial goals.

Swedish telco Ericsson and software giant Oracle recently announced winding down their respective ad businesses. 

Singaporean telco Singtel divested Amobee to Tremor International, now Nexxen.

Verizon sold its digital media unit, including Yahoo and AOL, to Apollo Global Management.

Goldman Sachs served as lead financial adviser to Outbrain, with Jefferies and Mizuho also acting as financial advisers.

Meitar Law Offices, Bryan Cave Leighton Paisner and Cravath Swaine & Moore served as legal advisers to Outbrain.

Outbrain to acquire Teads in $1B ad tech deal

Altice's sale of Teads is the latest split up between telco and ad tech.

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Outbrain (Nasdaq: OB) has agreed to acquire ad tech firm Teads from French telecom Altice for $1 billion. Why it matters: The deal is the latest split up between telco and ad tech and bolsters Outbrain&#x27;s business as its stock struggles on the public market.

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Outbrain to acquire Teads in $1B ad tech deal

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