Millennial Media buying rival for $197M, guidance fails to impress

|About: Millennial Media, Inc. (MM)|By:, SA News Editor

In tandem with its Q2 report, Millennial Media (MM) announces it's buying rival mobile display ad network Jumptap for 24.6M shares (worth $196.8M based on Millennial's AH trading price of $8). JumpTap shareholders will own 22.5% of the company post-acquisition.

Millennial and Jumptap (occasionally feared as a rival and once planning an IPO) are apparently betting their combined forces will yield a tougher rival to Google's AdMob (the market's unquestioned leader) and Apple's iAd. Following disappointing guidance earlier this year, fears have been running high that Millennial is losing share.

Those fears might not be soothed by Millennial's Q2 revenue miss, nor by its new guidance: Millennial projects the two companies will have combined 2013 revenue of $340M-$350M. Millennial had previously forecast 2013 revenue of $270M-$280M (up from 2012's $178M thanks to rapid industry growth), and Jumptap posted 2012 revenue of $63.6M.

The companies are expected to have combined 2013 adjusted EBITDA of -$1M to $1M. Millennial previously expected 2013 adjusted EBITDA of $17M-$18M.

Jumptap brings 100M user profiles (44M multi-screen) and a big patent portfolio (55 issued, 50 pending) to the table. Millennial had 450M monthly unique users at the end of Q2 (up 30M Q/Q) and supported 45K apps (up 3K Q/Q). $20M-$25M in deal synergies are expected.

Millennial's Q2 opex rose 51% Y/Y, higher than rev. growth of 45%.

MM -5.9% AH. Q2 results, PR, Jumptap slides