Teads’ M&A rumors are firming up with a deal to merge with Outbrain

Speculation over a sale of Teads intensified at this year’s Cannes Lions Festival of Creativity, with sources informing Digiday that Teads’ gross media revenues were in the region of $820 million for its last full financial year in 2023. Outbrain, by comparison, brought in $935.8 million in revenue in 2023, down 6% year over year, according to the company’s earnings. Outbrain’s first quarter 2024 earnings also reported revenue was down 6% year over year, totaling $217 million.

Business Insider first reported the news. Teads declined to respond to a request for comment and Outbrain declined to comment on any M&A speculation, per company policy.

Terms of the deal are uncertain at this point, and it’s not known whether or not Outbrain is acquiring Teads outright from Altice. If it is an acquisition, Outbrain will likely be financed by a third party, as multiple sources told Digiday they questioned the strength of either company’s financial standing.

“They both need exits, and probably have some overlapping areas, but I’m not sure they make sense from a financial standpoint,” said one ad tech consultant, who spoke on condition of anonymity. 

Multiple sources told Digiday that several parties (both private equity and strategic players) looked at Teads’ financials in recent months, and while Altice was seeking a sale price north of $1 billion, potential private equity suitors were more interested in a deal at five-to-six times its EBITDA.

Teads officially declined to comment on such numbers when approached for clarification at the time it was first reported by Digiday that the company was up for sale. In a subsequent analysis for Quo Vadis, ad tech economist Tom Triscari crunched recent numbers posted by Teads — a company famed for its outstream video ad format and which operates as “a well-done ad network” — and devised a “$2.2 billion fair market value.”

The latest M&A development comes three years after the ad tech outfit attempted to join the post-Covid wave of ad tech companies listing on the public markets, but such efforts were rebuked by Wall Street, despite revenues that rounded out at $678 million for fiscal year 2021. Some felt that public investors’ faith in ad tech stocks had simply waned by the time of Teads’ proposed IPO in July 2021, with the number of companies in the sector debuting on the public markets numbering close to a dozen between late 2020 and early 2022.

Outbrain, however, was one of the companies to take the IPO leap, in July 2021, though its share prices have fallen from $20 to $4.86 at the time of publication. The content recommendation firm has been known to explore big mergers in the past, including a proposed merger with its main competitor Taboola in 2019, which was later struck down by regulators due to monopoly concerns.

One ad tech executive, who spoke on the condition of anonymity given the sensitivity of this corporate nature, said Outbrain has been losing ground to Taboola in the years following the proposed merger. Where Taboola has doubled down on display ads and performance marketing, Outbrain has been pursuing improvements to its demand-side video solutions as a point of differentiation, the exec said. The only trouble is the overhead cost of such a pursuit, which is why they said Outbrain looked outward to Teads and other partners, like in the case of its acquisition of Video Intelligence in 2022.

The deal between Teads and Outbrain is occurring amid a flurry of mergers and acquisitions in the ad tech space, with sources expecting more deals by the close of the year, even amid lingering uncertainties.

For instance, the cost of borrowing money has been a significant factor in stalling the flow of deals in the sector over the past two years, for obvious reasons. An anticipated dip in interest rates is expected to help encourage buyers.

Meanwhile, political developments will also play a role, especially considering the uncertain future of figures like the Federal Trade Commission’s Lina Khan, should Republican candidate Donald Trump win the U.S. presidential race.

Then there are the seismic shifts happening at an industry level. From the loss of third-party addressability at scale, to the shifting landscape of measurement and the convergence of trends like CTV and retail media, dealmakers are striving to anticipate and navigate these changes ahead of time.