- Outbrain is nearing a deal to acquire or merge with Altice-owned adtech firm Teads, sources say.
- Teads is the larger of the two; Outbrain is likely working with a sponsor to finance the deal.
- Altice is seeking to divest Teads to help pare down its debt load.
Content recommendation firm Outbrain is closing in on a deal to acquire or merge with Teads, the adtech company owned by European telecommunications giant Altice, according to four sources familiar with the matter.
The talks are at an advanced stage, though a deal is not finalized. Discussions could ultimately fall apart, or another suitor could swoop in with a counteroffer.
The sources asked for anonymity to discuss sensitive corporate information, but their identities are known to Business Insider. The structure and value of the deal couldn't immediately be learned.
Spokespeople for Outbrain and Teads said it was company policy not to comment on M&A speculation. Altice International declined to comment.
An Outbrain-Teads combination would make an unexpected pairing — not least as Teads is the larger of the two. Teads had a head count of around 1,200, as of a March press release, while Outbrain said in its annual report that it had 942 employees and contractors as of the end of 2023.
Known for the so-called chum box grid of eyecatching ads on websites like CNN and Fox News, Outbrain went public alongside the rush of tech IPOs in 2021. But it's had a tough time on the public markets, amid a slowdown in revenue growth and fierce competition with its arch-rival Taboola, which, by contrast, has been flying recently. Outbrain's share price is down 76% since its IPO date; Taboola stock is down 66% since its public markets debut. The addition of Teads could help diversify its business beyond performance advertising, particularly in the area of video and brand advertising, which is designed to boost consumers' affinity toward a brand rather than just encouraging them to click on an ad.
It couldn't immediately be learned how Outbrain would finance such a deal. It currently has a market capitalization of around $230 million and it had $231.6 million in cash, cash equivalents, and investments in marketable securities as of March 2024.
Three of the sources said it was likely that Outbrain was working with a financial sponsor, such as a private-equity firm, to back its offer.
Altice, owned by the Israeli billionaire Patrick Drahi, is racing to divest assets in a bid to pare down its substantial debt pile. Teads parent company Altice International reported net debt of 9.2 billion euros, around $10 billion, at the end of the first quarter, while Altice France had some 24 billion euros, about $26 billion, in debt in the same period. Moody's downgraded Altice International's credit rating last month. (Altice USA — the owner of the Optimum and News12 media brands — separated from its European arm in 2018, though it is still controlled by Drahi.)
The urgency of Altice's debt situation could seriously weigh on Teads' eventual sale price. Altice appointed Morgan Stanley to advise on the Teads sale process last year, with Mergermarket reporting the telco giant was seeking 3 billion euros, around $3.2 billion, for the adtech company at the time. But even $1 billion-plus deals have been lacking in recent years as the market for adtech acquisitions cooled off.
Altice NV acquired Teads for $307 million in 2017 and had hoped to spin it out as a $5 billion public company in 2021. But the $751 million IPO plan was shelved after failing to attract enough investors.
Founded in France in 2011, Teads was known as the pioneer of the outstream ad format, where video ads appear within the context of an article and autoplay when the ad is in view. The company has since expanded its offering to include connected-TV ads and cookieless targeting solutions for both publishers and advertisers.
Teads reported 601 million euros ($654 million) in revenue in 2023, down 5.5% from the prior year. Its adjusted earnings before income tax depreciation and amortization were 157 million euros ($170 million), an 8.7% decrease from 2022.
Outbrain, meanwhile, reported $935 million in revenue — minus traffic acquisition costs of $708 million — and adjusted EBITDA of $28 million in 2023.
