Tees is exploring sale options, a development that comes three years after the Altice-owned ad tech company sought to join a wave of post-COVID ad tech public offerings.
The talks come ahead of a series of expected mergers and acquisitions in the industry, with sources telling Digiday that both private equity and strategic players are considering deals.
In September, Tees owner Altice Europe reportedly retained Morgan Stanley to advise it on the sale of its ad tech assets, which it acquired for $307 million in 2017, and multiple sources told Digiday that talks have intensified in recent weeks.
When asked by Digiday for clarification, Tees' chief marketing officer Natalie Bastian said the company has a policy of “not commenting on M&A rumors,” but rumors have been swirling within the company in recent weeks that a sale is imminent.
Due to the sensitive nature of M&A negotiations, sources are often hesitant to discuss such developments publicly, but another person familiar with the finances told Digiday that it is widely understood Altice's original target price was in excess of $1 billion.
Another source said potential private equity buyers would likely be interested in doing a deal for five to six times Teas' annual earnings before interest, tax, depreciation and amortisation (EBITDA).
Digiday was not able to estimate Teads' EBITDA. The company's most recent financial statement put it at $678 million for fiscal 2021, the same year the IPO was called off. Another source said that under current market conditions, the deal would be valued at less than $1 billion.
It's unclear if there is a clear front-runner to acquire Teads, but other sources have said a private equity group with an established presence in the ad tech space could make such a move and then combine the assets.
A surge in M&A?
Any deal would stand out in what many are calling a resurgence in ad tech M&A, in contrast to a lull in such activity in 2022 and 2023, with acquisitions by Seedtag, Equativ (formerly Smart), Madhive and Verve Group in recent weeks.
Around the same time, Adweek reported that 33Across and Sonobi have each appointed banking partners interested in selling, though expectations are likely to be lower than in 2021's frenetic period.
In its recent quarterly market report, LUMA Partners noted that deal volume in the second quarter of the year increased 5% from the first quarter, with larger transactions (over $100 million) “primarily driven by strategic buyers, which accounted for 75% of deal activity in the quarter.”
Any deal activity through the remainder of 2024 will likely fall into two categories: rationalization (or consolidation) deals and strategic expansion deals, LUMA Partners CEO Terence Kawaja said in an interview with Digiday in mid-June.
“There are also strategic deals to acquire other regions. [market] “Or another technology … and those tend to be higher valuation multiple transactions,” he said. “Then there are the consolidation transactions, where you don't tend to see groundbreaking valuation multiples.”
