Outbrain, a leading recommendation platform for the open web, is set to acquire Teads, a global media platform, in a deal worth approximately US$1 billion. The merger aims to create one of the largest open internet advertising platforms, targeting outcomes for awareness, consideration, and performance objectives across Connected TV (CTV), web, and mobile apps.

The transaction will consist of $725 million upfront cash, $25 million deferred cash, 35 million shares of common stock of Outbrain, and $105 million of convertible preferred equity.

The two companies said their combined platform will bring together 20,000 direct advertisers with a base of 10,000+ premium media environments, covering 50+ markets and reaching over 2 billion consumers per month.

The two companies are expected to generate a combined Ex-TAC Gross Profit of $660 - $680 million and Adjusted EBITDA of $180 - $190 million in 2024. Synergies are estimated to contribute an additional $50 - $60 million of Adjusted EBITDA annually in the second full year following the completion of the transaction.

"This is a transformative transaction to establish a true end-to-end, full-funnel platform for the open internet," said David Kostman, CEO of Outbrain. "The combination of our highly-complementary offerings accelerates our vision to become the preferred partner to deliver meaningful brand outcomes across premium, quality media environments - while scaling the industry-leading offerings Teads is known for. I believe this combination and the transaction's financial structure position Outbrain to deliver significant shareholder value in the years to come."

Upon closing of the transaction, Kostman will serve as CEO of the combined company, with current Teads Co-CEOs, Bertrand Quesada and Jeremy Arditi, serving as Co-Presidents. Asaf Porat will serve as COO, leading the integration of the two companies. Altice, the current owner of Teads, will appoint two board members (one non-affiliated) in addition to Outbrain's existing eight.

"This strategic combination presents vast new opportunities for the advertising industry at large. We've built a world-class team at Teads that has focused on driving the best video and branding outcomes, and in the last several years have successfully brought those strengths to CTV," said Quesada.

Arditi added: "By joining our expertise in omnichannel video with Outbrain's strengths in prediction and performance, we are poised to provide our customers and partners with more value than ever before."

The transaction is expected to be completed in the first quarter of 2025, subject to customary closing conditions, including the receipt of Outbrain stockholder approval and regulatory approvals. The combined company is expected to generate advertiser spend of more than $1.7 billion in 2024. Outbrain is also providing selected preliminary results for the second quarter of 2024, with Ex-TAC Gross Profit of $55 - $57 million and Adjusted EBITDA of at least $6 million.