Teads is exploring sale options as M&A in ad tech heats up

Teads is exploring sales options, a development that comes three years after the Altice-owned ad tech outfit attempted to join the post-Covid wave of ad tech companies listing on the public markets.

Such discussions have also taken place ahead of an anticipated wave of mergers and acquisitions in the space, with sources telling Digiday that both private equity and strategic players have explored a deal.

In September 2023, it was reported that Teads owner Altice Europe had appointed Morgan Stanley to advise on the divestiture of the ad tech asset it acquired for $307 million in 2017, with multiple parties telling Digiday that such talks have intensified in recent weeks.

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Teads’ chief marketing officer, Natalie Bastian, noted the company’s policy to “not comment on M&A rumors” when Digiday approached for clarification. Although, it is understood that rumors of an imminent sale have been bubbling internally in recent weeks.

The sensitive nature of M&A negotiations means that sources are often hesitant to discuss such developments publicly, but separate parties familiar with the financials told Digiday it is widely understood that Altice’s initial target price was north of $1 billion.

Separate sources claimed potential private equity suitors were more likely to be interested in making a deal at five to six times Teads’ annual earnings before interest, taxes, depreciation and amortization (EBITDA).

Digiday was unable to estimate Teads’ likely EBITDA — its last confirmed financials were $678 million for fiscal year 2021, the same year as its aborted initial public offering — with separate sources noting that current market conditions would support a deal valuation of south of $1 billion.

It remains uncertain if there is a clear frontrunner to acquire Teads. Although, separate sources have pointed to the possibility of private equity groups with an existing position in ad tech making such a move, and then consolidating their assets.

A flurry of M&A?

Any deal would stand out amid what many are terming as an M&A revival in ad tech. This contrasts with the sallow years for such activity during 2022 and 2023, with Seedtag, Equativ (formerly Smart), Madhive and Verve Group all making purchases in recent weeks.

In a similar timeframe, Adweek noted that 33Across and Sonobi have separately appointed banking partners hoping for a sale, albeit expectations are likely to be down from the heady days of 2021.

In its recent quarterly market report, LUMA Partners noted how deal volume in the second quarter of the year was up 5% from Q1, with scaled deals (greater than $100 million) “largely driven by strategic buyers who accounted for 75% of deal activity in the quarter.”

Speaking with Digiday in mid-June, Terence Kawaja, LUMA Partners’ CEO, noted that any subsequent dealmaking activity in the remainder of 2024 will likely fall into two categories: rationalization (or consolidation) deals and strategic expansion deals.

“There’s strategic deals where someone is acquiring another geography [market] or another technology … and they tend to be higher multiple deals,” he said. “Then there’s consolidation deals, you don’t tend to see groundbreaking valuation multiples there.”

https://digiday.com/?p=549805

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