SCHEDULE 13D: Altice Group Becomes Major Shareholder in Outbrain Inc. Following Teads Acquisition

Altice Teads, a subsidiary of Patrick Drahi's Altice Group, has become a significant shareholder in Outbrain Inc., acquiring a 46.8% stake as part of Outbrain's acquisition of Teads.

Summary

• Outbrain Inc. completed the acquisition of Teads, a private limited liability company and wholly-owned subsidiary of Altice Teads, on February 3, 2025.
• As consideration for the acquisition, Outbrain paid Altice Teads $625 million in cash and issued 43,750,000 shares of Outbrain Common Stock.
• Following the transaction, the Reporting Persons (Patrick Drahi and various Altice/Next entities) collectively beneficially own 43,750,000 shares of Outbrain Common Stock.
• This ownership stake represents 46.8% of Outbrain's total outstanding common stock, calculated based on the newly issued shares and the 49,649,359 shares outstanding as of November 7, 2024.
• In connection with the acquisition, Outbrain and Altice Teads entered into a Stockholders Agreement and a Registration Rights Agreement.
• The Stockholders Agreement grants Altice Teads significant governance rights, including the right to nominate directors to Outbrain's Board of Directors based on their ownership percentage.
• The Registration Rights Agreement provides Altice Teads with customary demand and piggyback registration rights for their Outbrain shares.

Sentiment

Score: 7

Explanation: The document reports the successful completion of a significant acquisition and the establishment of strategic partnerships and governance structures. While it involves substantial share dilution for existing shareholders, the overall tone is factual and indicates a planned, executed transaction, which is generally a positive milestone for the involved parties.

Positives

• The completion of the Teads acquisition by Outbrain signifies a strategic expansion for Outbrain, integrating a new business unit.
• The significant equity stake held by Altice Teads and its affiliates aligns their interests with Outbrain's long-term success.
• The Stockholders Agreement provides Altice Teads with board representation, allowing for direct influence and oversight in Outbrain's strategic direction.

Negatives

• The issuance of 43,750,000 new shares to Altice Teads results in significant dilution for existing Outbrain shareholders.
• The substantial ownership stake (46.8%) and board nomination rights granted to Altice Teads could lead to a concentration of control and influence over Outbrain's operations and strategic decisions.

Risks

• Potential for conflicts of interest due to Altice Teads' significant ownership and board representation, especially if their strategic priorities diverge from those of other Outbrain shareholders.
• The standstill restrictions and voting agreements outlined in the Stockholders Agreement could limit the flexibility of Altice Teads in certain actions related to Outbrain's securities.

Future Outlook

The Reporting Persons hold the acquired securities for general investment purposes and reserve the right to retain or sell all or a portion of their holdings based on an ongoing evaluation of Outbrain's business, market conditions, and other investment opportunities. Altice Teads will have the right to nominate directors to Outbrain's board, with the number of nominees increasing to three commencing on the three-year anniversary of the closing date, provided certain ownership thresholds are met.

Management Comments

• Patrick Drahi's principal business is as a private investor.
• The principal business of Next Alt, Next Luxembourg, and Next Luxembourg Management GP is to serve as a holding company for Mr. Drahi's private investments.
• The principal business of Altice Teads, Altice International, Altice Luxembourg, and Altice Group Lux is to serve as a holding company within the Altice group, a convergent leader in telecommunications.

Industry Context

This filing details a significant ownership change in Outbrain Inc., a company operating in the digital advertising and content recommendation industry. The acquisition of Teads, a video advertising platform, by Outbrain suggests a strategic move to expand Outbrain's offerings and market reach, particularly in video advertising. The entry of Altice Group, a major telecommunications and media conglomerate, as a substantial shareholder indicates a potential strategic alignment or increased influence from a large industry player in the digital content and advertising ecosystem.

Comparison to Industry Standards

• NA This document is a Schedule 13D filing detailing an acquisition and beneficial ownership, not a financial performance report that would typically include comparisons to industry benchmarks or specific comparable companies' results.

Management Changes

Corporate Governance

Related Party Transactions

• The acquisition of Teads by Outbrain Inc. from Altice Teads S.A. is a related party transaction, as Altice Teads is part of the Altice Group, which is controlled by Patrick Drahi, who is also a Reporting Person.
• The Stockholders Agreement and Registration Rights Agreement entered into between Outbrain Inc. and Altice Teads S.A. are related party transactions, establishing ongoing governance and share transfer rights between the entities.

Stakeholder Impact

• **Shareholders:** Existing shareholders experience significant dilution due to the issuance of 43.75 million new shares. The new governance structure gives Altice Teads substantial influence, potentially impacting future strategic decisions and shareholder value.
• **Employees:** The acquisition of Teads by Outbrain could lead to integration efforts, potentially affecting employees of both entities through restructuring or new opportunities.
• **Customers/Suppliers:** The combined entity of Outbrain and Teads may offer expanded services or altered business relationships for customers and suppliers in the digital advertising ecosystem.
• **Creditors:** The cash component of the acquisition ($625 million) could impact Outbrain's liquidity and debt profile, which may be relevant to creditors.

Next Steps

• As promptly as practicable following the Closing, two designees of Altice Teads (Dexter Goei and Mark Mullen) will be appointed to the Outbrain Board, subject to customary procedures.
• Altice Teads will have the right to nominate directors to the Outbrain Board based on their ownership percentage, with the right to nominate three directors commencing on the three-year anniversary of the Closing Date if certain ownership thresholds are met.
• The Reporting Persons may, at any time, retain or sell all or a portion of their Outbrain securities, subject to the terms of the agreements.

Key Dates

Keywords

Outbrain Inc., Altice Teads, Teads acquisition, Schedule 13D, beneficial ownership, stockholders agreement, registration rights, corporate governance, Patrick Drahi, media technology, advertising technology, SEC filing