Taboola says its acquisition of Outbrain broke down because, after reviewing financial information, the original terms did not benefit its shareholders enough. Outbrain has declined to expand on the details of the breakdown.
The two rival advertising platform companies announced a $US 850 million “merger” in October last year which would see Outbrain shareholders receive shares representing 30 per cent of the combined company plus $250 million of cash.
Taboola would maintain naming rights of the merged company and it would be led by Taboola CEO Adam Singolda while Outbrain CEO Yaron Galai was to stay on for one year to assist in the transition.
But last week, nearly a year after the original announcement, it was reported by major US outlets that the deal was off after the original terms expired and the two companies could not agree on revised terms.
The media advertising industry has been rocked by the effects of the coronavirus with many brands pausing or pulling back spending, bringing into question the current value of products and services like Taboola and Outbrain’s content-recommendation platforms.
Outbrain CEO Yaron Galai confirmed the split las week but declined to elaborate on details which he described as confidential.
A day later the Taboola CEO suggested it was a question of shareholder value and downplayed reports of cultural fit issues.
“As part of the process we exchanged financial information with each other. Based on the relative performance of the two companies, we decided the original deal does not make sense anymore. We could choose to pay the same price of 30 per cent in equity + $250M, but our shareholders thought it’s too much for what we would get based on the relative contribution of the two companies,” Singolda wrote in a company blog post.
“Nothing emotional, not about culture fit, just data.
“Out of deep respect, we tried to do a deal that was equity only (but less equity), or equity and cash (but less cash) that matched Outbrain’s financial contribution to Taboola. We failed, and we called it off.”
Singolda did not address the reports that uncertainty about regulatory approval was a factor. And while he didn’t directly address the uncertainty in the market caused by the current pandemic he said Taboola had the technology and financial resources to invest in the “long haul.
Correction: An earlier version of this article stated Outbrain was yet to issue a statement. The company had posted a blog post on the merger breakdown. The article has been updated to include Outbrain’s comments.