Advertising platforms Taboola and Outbrain have reportedly called off their $US 850 million merger nearly a year after announcing it, with sources citing the weak advertising market since COVID-19 struck as a major factor.

A formal announcement has not yet been made but is expected in the coming days. Neither Taboola or Outbrain immediately responded to requests for comment.

The two companies, which provide publishers with ad-based content recommendation platforms, announced a “merger” in October last year that would see Taboola acquire Outbrain for shares and $250 million cash.

The deal, years in the making, would have created a company with expected yearly revenues above $US 2 billion and a potential user reach of 2 billion people a month.

TechCrunch sources say a weakened media market during COVID-19 as well as regulatory hurdles ultimately harpooned the deal. CNBC is also reporting the merger is off.

“We’ve seen changing conditions in the market due to COVID-19, and we decided to terminate the deal,” said a TechCrunch source close to the merger, who asked to remain anonymous. “It’s been such a long road, and it’s not great…but walking away is the right move.”

Both companies offer traditional online ads as well as advertising widgets for online publishers. The widgets are used to circulate publishers’ own content and to host other links and ads. But with many brands pulling back budgets during the pandemic, financiers for the merger have hesitated.

It was difficult to raise the $250 million cash required under the original terms of the deal which expired last month and was not extended. And Outbrain reportedly balked at attempts to convert the cash part to shares.

Regulators in the US have nominally cleared the deal but it is still awaiting clearance in the UK and Israel, the latter where both companies were founded.

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