Unsurprisingly, shares in TubeMogul (NASDAQ:TUBE) came off a halt up 82% premarket following the news that Adobe (NASDAQ:ADBE) will buy the video ad platform for $540M -- about $14/share, an 82.5% premium to yesterday's close.
Other ad-tech firms on the move premarket: TTD +4.6%; FUEL +2.2%. Adobe is up 0.8% premarket.
"Whether it's episodic TV, indie films or Hollywood blockbusters, video consumption is exploding across every device and brands are following those eyeballs," said Brad Rencher, Adobe's GM of digital marketing.
AdSupply has offered $35M -- about $1.50 a share, a ten-bagger premium over the current price of $0.144 -- in a letter to Adaptive's board.
The company will form a committee to review the deal and Adaptive CEO John Strong says they'll do their fiduciary duty to check all options.
AdSupply chief Justin Bunnell said companies in the ad-tech space (particularly sometime candidates Rubicon Project (NYSE:RUBI), Rocket Fuel (NASDAQ:FUEL) and Criteo (NASDAQ:CRTO)) should be ready for what might be a wave of acquisitions with stock prices lower than before and "as companies prepare for the next round of competition."
Four months after fellow demand-side online ad platform Gravity4 made a $350M conditional buyout offer for Rocket Fuel (FUEL -0.5%), Gravity4 is at it again. Only this time, the company is offering $258M - a figure roughly even with Rocket Fuel's current market cap.
In a less-than-surprising move, Rocket Fuel has quickly rejected Gravity4's latest bid, while stating its board has "concluded that the proposal, which is highly conditional and inconsistent with customary public company transactions, is not credible."
Shares are less than a dollar above a 52-week low of $5.15. They're down 62% YTD.
Not surprisingly, Rocket Fuel (FUEL +0.8%) has turned down a $350M acquisition offer from rival demand-side online ad platform Gravity4. "Our board of directors has evaluated your proposal in consultation with its independent advisors and concluded that the highly conditional and non-customary nature of your proposal does not constitute a credible offer," says interim CEO Marty Zweben in a 2-sentence open letter to Gravity4 CEO Gurbaksh Chalal.
Shares remain up 22% since Gravity4 made the offer (in tandem with the release of Rocket Fuel's Q1 results). They rallied yesterday in the wake of the Verizon/AOL deal.
Though the Nasdaq is down 0.9%, Yahoo (YHOO +1%) is higher following news Verizon is acquiring AOL (i.e. the company Starboard Value dreamed about merging with Yahoo) for $4.4B. Demand-side/programmatic ad tech platform owner Rocket Fuel (FUEL +3.4%), which competes with AOL's ad tech ops, is also up.
Citi's Mark May: "We view this deal as a positive for YHOO as it shows there are strategic buyers for this type of asset and because we view YHOO as a strong asset that is currently only valued at 1x our 2016 EBITDA estimate." With Yahoo spinning off its Alibaba stake later this year and exploring options for its Yahoo Japan stake, core Yahoo might soon be available by itself.
Last week, Rocket Fuel received an unsolicited $350M buyout offer from rival Gravity4 (and jumped in response). However, questions remains about Gravity4's ability to finance the bid, which has been viewed by many as a publicity stunt.
Rocket Fuel (NASDAQ:FUEL) has received an "unsolicited, conditional" buyout offer from fellow demand-side online ad platform Gravity4 for $350M in cash - a 9% premium to Thursday's close.
Rocket Fuel, which posted Q1 results last night, says its board "will evaluate the proposal," but also launches a defense of the company's market position. "Rocket Fuel has established itself as a leader in programmatic marketing technology by using artificial intelligence ... Rocket Fuel is executing against its business imperatives to improve operating efficiency, deepen agency relationships and expand its enterprise relationships..."
Gravity4, founded only last year, has already acquired a string of ad tech companies. The firm is led by Gurbaksh Chalal, formerly the CEO of fellow ad tech firm RadiumOne (he was fired after pleading guilty to a domestic violence charge). Chalal has also made a (rejected) offer to buy RadiumOne.
Rocket Fuel has risen to $8.47 premarket. The company's Q1 results were roughly in-line with the guidance provided in its April 22 pre-announcement. Q2 guidance is for non-GAAP revenue of $66M-$69M and adjusted EBITDA of -$2M to -$4M. The GAAP revenue consensus (doesn't back out ad impression purchase costs) is for revenue of $124.1M.
The consolidation wave isn't expected to let up in 2015, given a widespread belief there are far too many independent players competing in a market where bigger Internet names such as Google, Facebook, Yahoo, AOL, and Twitter also play prominent roles.
"I don’t know what the right number [of companies] is, but it’s probably less than 10," says Luma Partners' Terence Kawaja, citing Google/Facebook's share gains. Coady's Colin Knudsen argues the services of ad tech firms focused on one particular offering are typically more expensive, and that "only the best will be sustainable as standalone entities over time."
Though Rocket Fuel (NASDAQ:FUEL) beat Q2 estimates, it's guiding for Q3 revenue $96M-$100M and full-year revenue from current operations of $385M-$405M, below consensus estimates of $109.6M and $422.6M.
Rocket Fuel states advertiser commitments were weaker than expected towards the end of Q2. It blames tighter control of client spend by internal ad agency trading desks, a shift towards direct licensing among advertisers, and (notably) concerns about industry ad inventory quality.
The online ad retargeting platform has also announced it's buying [x+1], provider of a programmatic (automated) ad platform that helps marketers manage and optimize the use of their data for ad campaigns. Rocket Fuel is paying $100M in cash + 5.4M shares (current value of $101.8M).
The companies predict the combo of [x+1]'s data management offerings with Rocket Fuel's A.I./analytics-driven programmatic ad platform will give CMOs "a robust toolset to control the content, timing, and frequency of messaging to their customers on a global basis." Rocket Fuel also sees opportunities to cross-sell to [x+1]'s clients, which include Fortune 100 businesses.
[x+1] is expected to contribute $18M-$22M to 2014 sales, assuming the deal closes early in Q4.