Mobile ad company Millennial Media will acquire Nexage. Nexage provides “real-time-bidding” for advertisers who want to automate the buying and selling of mobile advertising. The deal is worth $US107.5 million in cash and stock.
Nexage had previously taken a total of $US20 million in funding from investors. Its publisher clients have included NFL, Rovio (Angry Birds) and Reuters.
Nexage shareholders will receive Millennial stock valued at $US2.21 per share; Millennial’s stock traded at $US1.77 before the market opened in New York, down from a high of $US23.50 after it first went public in 2012.
The move is part of an ongoing trend of consolidation in the mobile ad business. Previously, Twitter had acquired MoPub and Tapcommerce, Yahoo acquired Flurry, Opera acquired AdColony, andPubmatic acquired Mocean Mobile. Millennial had also acquired Jumptap.
CEO Michael Barrett said the acquisition helps Millennial provide a full range of services to mobile advertisers and the app publishers who want to sell them space. Barrett wants Millennial to get as big as possible within the market, he told AdExchanger:
“We wanted to build buy or partner on the SSP side,” Barrett said. Nexage was an especially good fit since it let Millennial extend its own existing relationships with mobile app developers (60,000 or so) with Nexage’s strength in mobile web. “With mobile web comes different ad units. It creates a really compelling exchange platform where buyers are going to get access to a wide breadth of mobile inventory that is not easily found on one platform.”
AppNexus also recently did a deal with Millennial to create a new mobile ad exchange. AdExchanger says the move may hurt AppNexus:
However, the development is likely to come as a bitter pill for AppNexus, which for the past year has been a key partner to Millennial and may now have to look elsewhere to shore up its mobile supply.
The acquisition of Nexage comes after a disastrous Q1 for Millennial. It reported $US72.6 million in revenue versus expectations of $US75.52 million, and then lowered guidance for the rest of the year. Analysts were looking for $US96.4 million in Q2, but Millennial forecasted $US70-75 million. Millennial’s stock plunged on the news. In Q2, Millennial’s revenue increased to $US67.3 million, up 18.1%.
Here is the press release:
Millennial Media to Acquire Nexage, a Leading Mobile SSP and Advertising Exchange
Sep 23, 2014
Positions Millennial Media as Leading Independent Mobile Programmatic Marketplace
Baltimore, MD (September 23, 2014) — To accelerate its leading position in mobile advertising, Millennial Media (NYSE: MM) today announced it has signed a definitive agreement to acquire Nexage for approximately $US107.5 million in cash and stock, subject to certain adjustments. Based in Boston, privately held Nexage is a leading provider of Real-Time-Bidding (RTB) technology that helps to automate the buying and selling of mobile advertising.
“We are in a very exciting time right now as we help to build, educate and advance the role of RTB and programmatic solutions to advertisers, publishers, and developers,” said Michael Barrett, President and CEO of Millennial Media. “Our vision is to create a full-stack solution that enables us to open the flow of impressions, operate a leading independent exchange, and maximise the yield for our publishers. The opportunity to integrate Nexage’s programmatic technology with our deep roots and heritage in agency relationships will uniquely position us in this fast paced ecosystem. Together, our companies will be able to offer managed services for agencies and a complete set of programmatic tools for automated buyers. We are looking forward to having the Nexage team join our family as we continue to build the next generation of mobile advertising.”
The proposed acquisition of Nexage underpins Millennial Media’s platform business in three key areas:
Increasing yield for publishers via expertise and scale
Nexage’s offerings will complement Millennial Media’s demand from agencies and advertisers with a complete programmatic marketplace. Nexage’s marketplace includes:
A leading exchange that allows Demand Side Platforms (DSPs) and trading desks to buy ad impressions via programmatic direct, private exchange and open auctions.
A Supply Side Platform (SSP) and mediation solution that allows publishers to expose impressions to classic networks – including the Facebook Audience Network, Google’s Admob, and iAd. In total, Nexage is connected to over 225 programmatic buyers and networks, providing one of the most complete mobile monetization solutions globally.
An ad server that publishers and developers can utilise to launch directly-sold campaigns.
Allowing advertisers to buy impressions programmatically
Millennial Media is known for its full service global sales, service, and creative teams. These teams are able to provide consultative sales based on their deep relationships with marketers and agencies. Following the Nexage acquisition, Millennial Media will be in a position to enable buyers to execute deals via public and private RTB auctions and programmatic direct deals.
Enabling data and audience buying
With Millennial Media’s existing data management platform (DMP) as its backbone, the two companies will be in a distinct position to enrich impressions through first and third party data. Millennial Media’s mobile-first DMP can ingest publisher and advertiser data to enable re-targeting, audience extensions, and cross-device attribution.
“Millennial Media is an extremely well known name in our industry, and a real pioneer and leader in bringing brand dollars into mobile,” said Ernie Cormier, President and CEO of Nexage. “I believe the addition of Nexage’s platform and people will further Millennial Media’s mission in creating a leading independent mobile advertising platform and vital programmatic marketplace.”
Under the terms of the agreement, Millennial Media will pay approximately $US22.5 million in cash and approximately $US85 million in stock, subject to certain adjustments. Accordingly, Nexage shareholders will receive approximately 37 million newly issued shares of Millennial Media based on a price of $US2.21 per share of Millennial Media common stock, which is the volume weighted average trading price per share during the fifteen trading days immediately up to and including September 16, 2014, corresponding to approximately 26% ownership for Nexage shareholders on a pro forma combined basis, based on issued and outstanding shares. The closing of the acquisition is subject to the satisfaction of various customary closing conditions, including approval by Millennial Media’s shareholders of the proposed issuance of the shares to Nexage shareholders in accordance with the rules of the New York Stock Exchange.
LUMA Securities acted as the financial advisor to Millennial Media and GCA Savvian acted as the financial advisor to Nexage.
Reaffirming Q3 2014 Outlook
In connection with today’s announcement, Millennial Media is reaffirming that it expects Q3 2014 total revenue to be in the range of $US65 million to $US70 million and Adjusted EBITDA to be a loss of between $US(7) million and $US(8) million.
Millennial Media will host a conference call on September 23, 2014 at 8:00 a.m. ET to discuss the transaction. To listen to the conference call please dial 866-318-8614 or for international 617-399-5133 and provide the following passcode: 27515748. If you are unable to listen to the live conference call, a replay will be available through September 30, 2014, and can be accessed by dialling 888-286-8010 or for international 617-801-6888 using passcode 65035767.