Teads, an ad tech company known for its out-stream video ad formats, is being sold to content recommendation company Outbrain for an undisclosed sum. This sale follows weeks of speculation after Teads’ owner, Altice Europe, sought advice from Morgan Stanley on selling the asset it bought for $307 million in 2017.
The speculation peaked at the Cannes Lions Festival of Creativity, where it was revealed that Teads’ gross media revenues reached $820 million in 2023. In comparison, Outbrain’s revenue for 2023 was $935.8 million, though it was down 6% year-over-year.
Despite the sale being reported, both Teads and Outbrain have declined to comment on the specifics of the deal. There are uncertainties regarding whether Outbrain is fully acquiring Teads or entering another type of partnership.
Speculation suggests that Outbrain may require third-party financing for the acquisition, as doubts have been raised about the financial stability of both companies. An ad tech consultant mentioned the need for exits for both companies and questioned the financial logic of the deal.
Teads Sold to Outbrain in Ad Tech Deal Amid Market Speculation and Financial Uncertainties
Several potential buyers, including private equity firms, reviewed Teads’ financials, with Altice initially seeking over $1 billion for the sale. However, private equity interest was more conservative, looking at five-to-six times Teads’ EBITDA.
Teads’ market value has been estimated at $2.2 billion by ad tech economist Tom Triscari, though the company has refrained from confirming these figures. Previously, Teads attempted an IPO in 2021 but failed to gain traction on Wall Street, which had seen numerous ad tech companies go public during that period.
Outbrain, which successfully went public in 2021, has seen its stock price drop significantly since then. The company has been losing ground to its main competitor, Taboola, particularly after a failed merger attempt in 2019 due to regulatory concerns.
Outbrain has been focusing on enhancing its demand-side video solutions to differentiate itself from Taboola’s emphasis on display ads and performance marketing. The acquisition of Teads could potentially help Outbrain strengthen its position in the market.
The Teads-Outbrain deal is part of a broader trend of mergers and acquisitions in the ad tech industry, which has faced challenges such as high borrowing costs and regulatory uncertainties.
However, an expected decrease in interest rates and changes in political landscapes, including the future of regulatory figures, could influence the pace of these deals. Additionally, industry shifts like the decline in third-party addressability and the rise of CTV and retail media are significant factors that dealmakers must consider as they navigate the evolving ad tech landscape.
