DEFM14A: Outbrain to Acquire Teads in $1 Billion Deal, Stockholder Vote Scheduled

Outbrain Inc. is set to acquire Teads S.A., pending stockholder approval at a special meeting on December 5, 2024, in a transaction valued at approximately $1 billion.

Summary

• Outbrain Inc. has entered into a Share Purchase Agreement to acquire Teads S.A.
• The acquisition consideration includes $725 million in cash, 35 million newly issued shares of Outbrain Common Stock, and 10.5 million Series A Convertible Preferred Shares.
• Altice Teads will also be entitled to a deferred cash payment of $25 million from Outbrain.
• Following the transaction, Altice Teads is estimated to own approximately 41% of Outbrain's outstanding Common Stock, or approximately 48% assuming conversion of the Series A Preferred Shares.
• A special meeting of Outbrain stockholders is scheduled for December 5, 2024, to approve the share issuance required for the transaction.
• The Outbrain board of directors has unanimously recommended that stockholders vote in favor of the share issuance proposal.
• The transaction is expected to close during the first quarter of 2025, subject to customary closing conditions and regulatory approvals.
• Goldman Sachs has provided a fairness opinion to the Outbrain Board, stating that the Total Consideration to be paid by Outbrain for all of the outstanding equity interests of Teads pursuant to the Share Purchase Agreement was fair from a financial point of view to Outbrain.

Sentiment

Score: 7

Explanation: The document is generally positive, highlighting the strategic benefits of the acquisition and the unanimous recommendation of the Outbrain board. However, it also acknowledges potential risks and uncertainties associated with the transaction, which tempers the overall sentiment.

Positives

• The Outbrain board believes the acquisition will result in operating efficiencies, synergies, and cost savings.
• The combined company is expected to benefit from increased global scale and a more comprehensive technology solution.
• The Outbrain board anticipates that the transaction will be accretive to key financial metrics.
• The Outbrain board expects that combining the companies creates a strong combined data asset and comprehensive platform with predictive AI capabilities that will improve business outcomes and drive results at each step of the customer journey.
• The Outbrain board believes that there is high growth potential for the combined business, including entering new markets, growing positions in current markets, unlocking new solutions and introducing new products for customers.

Negatives

• Current Outbrain stockholders will experience dilution of their ownership percentage upon completion of the transaction.
• Outbrain will incur significant transaction and integration-related costs.
• The combined company will incur a substantial amount of indebtedness in connection with the financing for the transaction.
• The market price of the Common Stock may decline as a result of the Transaction.

Risks

• The completion of the transaction is subject to conditions, some or all of which may not be satisfied.
• The transaction may be completed even though material adverse changes may occur prior to the closing.
• Certain provisions of the Share Purchase Agreement may discourage third parties from submitting competing proposals.
• Outbrain and Teads are subject to various uncertainties while the transaction is pending that could adversely affect their businesses, financial condition and results of operations.
• The combined company may need to raise additional financing in the future to fund its operations, which may not be available to it on favorable terms or at all.
• The combined companys internal control over financial reporting may not meet the standards required by Section 404 of the Sarbanes-Oxley Act.

Future Outlook

Outbrain anticipates that the transaction will be completed during the first quarter of 2025, assuming that our stockholders approve the Share Issuance Proposal, applicable regulatory approvals are received, and the other conditions to the Transaction set forth in the Share Purchase Agreement are satisfied or waived.

Management Comments

• Outbrain is excited about the opportunities the Transaction brings to its stockholders, and thanks you for your consideration and continued support.
• The Outbrain Board has fixed the close of business on October 31, 2024, as the record date (the record date) for the determination of stockholders entitled to notice of, and to vote at, the special meeting and any adjournment or postponement thereof.

Industry Context

The announcement highlights the ongoing consolidation in the advertising technology sector, with companies seeking to expand their capabilities and reach through strategic acquisitions. The acquisition of Teads by Outbrain reflects a trend towards creating more comprehensive, end-to-end solutions for advertisers and media owners.

Comparison to Industry Standards

• The document does not provide specific financial metrics for Teads or Outbrain that would allow for a direct comparison to industry standards.
• However, the document mentions that Outbrain has delivered over $5 billion in direct revenue to its partners since its inception, which positions it as a significant player in the Open Internet advertising space.
• Teads is described as operating a leading, end-to-end, omnichannel technology platform, which suggests a competitive position relative to other platforms in the digital advertising market.
• The document does not provide enough information to assess the combined company's competitive position relative to industry giants like Google and Meta.

Corporate Governance

Legal Proceedings

• Between October 9, 2024 and October 31, 2024, Outbrain received three demand letters from purported stockholders of Outbrain alleging disclosure deficiencies in the preliminary proxy statement filed by Outbrain on October 4, 2024.

Stakeholder Impact

• Outbrain stockholders will experience dilution of their ownership percentage.
• Outbrain and Teads employees could experience uncertainty about their future roles within the combined company.
• Customers, suppliers, business partners and other persons with whom Outbrain or Teads has a business relationship may delay or defer certain business decisions or decide to seek to terminate, change or renegotiate their relationships with Outbrain or Teads, as the case may be, as a result of the Transaction.

Next Steps

• Outbrain stockholders will vote on the share issuance proposal at a special meeting on December 5, 2024.
• The parties will work to obtain required regulatory approvals.
• Outbrain will finalize debt financing arrangements.
• Outbrain and Teads will continue to operate as separate companies until the transaction closes.

Key Dates

Keywords

Outbrain, Teads, acquisition, merger, stockholders, share issuance, Altice Teads, proxy statement, preferred shares, common stock