Highlights:

• Outbrain will acquire Teads in an approximately $1 billion transaction, consisting of $725 million upfront cash and $25 million deferred cash, 35 million shares of common stock of Outbrain, and $105 million of convertible preferred equity.
• The combination will create one of the largest open internet advertising platforms, differentiated by its ability to drive outcomes for awareness, consideration, and performance objectives — across CTV, web and mobile apps.
• The two companies will bring together a total 20,000 direct advertisers with a base of 10,000+ premium media environments — creating one of the largest, direct supply paths across the open internet and CTV.
• The combined platform will cover 50+ markets and reach over 2 billion consumers per month.
• The two companies are expected to generate a combined Ex-TAC Gross Profit of $660 – $680 million⁽¹⁾⁽²⁾ and Adjusted EBITDA of $180 – $190 million⁽¹⁾⁽²⁾ in 2024E. Synergies are estimated to contribute an additional $50 – $60 million of Adjusted EBITDA annually in the second full year following completion of the transaction, with further opportunities for expanded synergies in the following years.
• Upon closing of the transaction, David Kostman, CEO of Outbrain, 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.

Outbrain a technology platform that drives business outcomes through engagement, announced today it has entered into a definitive agreement to acquire Teads, the global omnichannel video platform.

The strategic combination will unite two of the most recognized names in digital advertising to create an end-to-end, omnichannel advertising solution for the open internet. The transaction will combine Outbrain’s AI-driven performance technology with Teads’ leading video and branding solutions, merging the companies’ highly-complementary capabilities into a comprehensive full-funnel solution for advertisers.

The combined company will provide advertisers with unified access to the most engaging and valuable consumer media experiences, from CTV to online shopping. Once the combination is completed, the company will represent a break from established platform players that base their value primarily on views and impressions. In contrast, the combined company plans to focus on delivering more tangible outcomes such as attention, deep engagement, and e-commerce conversions — across the multitude of previously fragmented premium environments on the open internet, including connected TV.

David Kostman, CEO of Outbrain said,

“This is a transformative transaction to establish a true end-to-end, full-funnel platform for the open internet,”  “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’m incredibly proud of what our team at Outbrain has created, and strongly believe that with Teads we will build tremendous value for our customers, employees, and partners. I believe this combination and the transaction’s financial structure position Outbrain to deliver significant shareholder value in the years to come.”

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Bertrand Quesada, Co-Founder and Co-CEO of Teads said,

“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,” 

Teads Co-CEO Jeremy 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. Having known the Outbrain team for a decade, we know we’re creating an amazing combined company focused on innovation and excellence.”

The transaction reflects the opportunity to revolutionize the advertising landscape by offering a scaled platform that connects direct supply with direct demand, nurturing audiences and optimizing marketing results from discovery to purchase. This combination will address the self-limiting choice between branding and performance that marketers currently face when advertising on the open internet. As a result, the combined company will be well positioned to compete in the estimated — and growing — $175 billion open internet advertising opportunity.

Media owners stand to benefit from robust monetization opportunities across diverse advertiser budgets, providing critical revenue and growth to the world’s premiere journalistic and entertainment outlets.

 Key Combined Strengths:

• Creation of one of the largest, direct supply paths across premium environments on the open internet and CTV, expected to reach over 2 billion monthly consumers at a global scale across 50+ combined markets.
• Combination of highly-complementary expertise and product offerings: joining Teads’ deep video and branding capabilities with Outbrain’s leading performance solutions. Direct code-on-page and pixel-on-advertiser-site integrations will create an end-to-end solution that can continuously optimize outcomes.
• Powerful suite of data capabilities, gathered from contextual, publisher environment, and advertiser performance signals — making over 1 billion predictions per second.
• Unique, innovative ad experiences built by creative studio teams, creating new opportunities to tell engaging brand stories across the open internet, such as full-page takeovers, story sequencing from CTV to digital, and more.

Transaction Details:

• Total estimated consideration for the Teads acquisition is approximately $1 billion, on a cash free, debt free basis, including an upfront payment of $725 million, subject to standard adjustments, and a deferred cash payment of $25 million.
• Outbrain intends to finance the transaction with existing cash resources and $750 million in committed debt financing from Goldman Sachs Bank USA, Jefferies Finance LLC and Mizuho Bank, Ltd., subject to customary funding conditions. Outbrain will also issue to Altice 35 million shares of common stock, valued at approximately $169 million based on a one-month volume-weighted average price (VWAP) of Outbrain’s common stock as of July 30, 2024, of $4.82, and $105 million in convertible preferred equity.
• The convertible preferred equity to be issued to Altice will accrue dividends on a quarterly basis at a rate of 10% per annum, payable in cash or payment-in-kind at Outbrain’s option. The initial conversion price is $10.00 per share (subject to customary adjustments). The convertible preferred equity will be a perpetual instrument and may be redeemed by Outbrain in whole, or in part, in cash, prior to the five year anniversary of the issuance, subject to payment of certain premiums, and after the fifth anniversary of issuance without premium. Outbrain may also elect to convert all or a portion of the preferred shares then outstanding after two years, subject to certain share price thresholds.
• The $25 million deferred cash payment will be paid in one or more installments after closing, subject to compliance with certain covenants in the debt financing terms.⁽³⁾
• Additionally, Outbrain obtained commitments from Goldman Sachs Bank USA, Jefferies Finance LLC and Mizuho Bank, Ltd. for a $100 million revolving credit facility, a portion of which will be available to pay a portion of the cash consideration for the transaction and related fees and expenses, and which will otherwise be available for working capital and general corporate purposes.
• The transaction is expected to be completed in the first quarter of 2025 and is subject to customary closing conditions, including the receipt of Outbrain stockholder approval and regulatory approvals. The transaction has been unanimously approved by the Boards of Directors of Outbrain and Teads.
• Goldman Sachs & Co. LLC. is acting as lead financial advisor to Outbrain with Jefferies LLC and Mizuho also acting as financial advisors. Meitar Law Offices, Bryan Cave Leighton Paisner and Cravath Swaine & Moore are acting as legal advisors to Outbrain.

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Financial Highlights:

• The combined company is expected to generate:
  • Advertiser spend of more than $1.7 billion in 2024E.
  • Adjusted EBITDA of $230 – $250⁽¹⁾⁽²⁾ million based on combined 2024E Adjusted EBITDA of $180 – $190⁽¹⁾⁽²⁾ million plus the impact of $50 – $60 million of year two expected realized synergies.
  • Unlevered free cash flow of more than $150 million⁽¹⁾⁽²⁾ in 2024E, when including the impact of year two expected realized synergies.

• Outbrain is also providing selected preliminary results for the second quarter of 2024, as follows:
  • Ex-TAC Gross Profit of $55 – $57 million⁽²⁾, above the lower end of the previously-issued guidance of $53 million⁽²⁾.
  • Adjusted EBITDA of at least $6 million⁽²⁾, above the upper end of the previously-issued guidance range of $1 – $4 million⁽²⁾.
  • These preliminary results are based on currently available information and do not present all necessary information for a complete understanding of Outbrain’s results of operations for the quarter ended June 30, 2024. Actual results will be reported at Outbrain’s upcoming earnings release, scheduled for August 8, 2024, and may differ from the preliminary results presented above.

^{_____________________________________________________
(1)} Amounts are presented on a combined basis and do not reflect any pro forma adjustments or other adjustments relating to integration activities, cost savings or synergies, the alignment of accounting policies, IFRS to US GAAP conversion, or the impacts of foreign exchange rates. Pro forma results presented in accordance with Article 11 of Regulation S-X could differ materially from the amounts presented above.

⁽²⁾ The above measures are forward-looking non-GAAP financial measures for which a reconciliation to the most directly comparable GAAP financial measure is not available without unreasonable efforts.

⁽³⁾ If the deferred payment is not paid by the third anniversary of closing, then its balance will increase to $37.5 million and will accrue interest annually at a rate of 10% per annum.

Conference Call and Webcast:

Outbrain will host an investor conference call this morning, Thursday, August 1^st at 8:30 am ET. Interested parties are invited to listen to the conference call which can be accessed live by phone by dialing 1-877-869-3847 or for international callers, 1-201-689-8261. A replay will be available two hours after the call and can be accessed by dialing 1-877-660-6853, or for international callers, 1-201-612-7415. The passcode for the live call and the replay is 13747889. The replay will be available until August 15, 2024. Interested investors and other parties may also listen to a simultaneous webcast of the conference call by logging onto the Investors Relations section of the Company’s website at https://investors.outbrain.com. The online replay will be available for a limited time shortly following the call.

Additional Information About the Transaction and Where to Find It:

This press release may be deemed to be solicitation material in respect of the stockholder approval (the “Stockholder Approval”) to authorize the issuance of certain equity securities of Outbrain as consideration for the proposed transaction. In connection with a special meeting of its shareholders for the Stockholder Approval, Outbrain intends to file relevant materials with the SEC, including Outbrain’s proxy statement in preliminary and definitive form. INVESTORS AND STOCKHOLDERS ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT AND OTHER RELEVANT MATERIALS CAREFULLY IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT OUTBRAIN, TEADS AND THE TRANSACTION. Investors and stockholders may obtain a free copy of these materials (when available) and other documents filed by Outbrain with the SEC through the website maintained by the SEC at www.sec.gov. In addition, free copies of these materials will be made available free of charge through Outbrain’s website at https://www.outbrain.com.

Participants in the Solicitation:

Outbrain and its directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of Outbrain in favor of the Stockholder Approval. Information regarding these directors and executive officers and a description of their direct and indirect interests, by security holdings or otherwise, is set forth in Outbrain’s proxy statement for its 2024 annual meeting of stockholders on Schedule 14A, which was filed with the SEC on April 26, 2024. To the extent holdings of Outbrain’s securities by its directors or executive officers have changed since the amounts set forth in such 2024 proxy statement, such changes have been or will be reflected on Initial Statements of Beneficial Ownership on Form 3 or Statements of Change in Ownership on Form 4 filed with the SEC. Additional information concerning the direct or indirect interests, by security holdings or otherwise, of Outbrain’s participants in the solicitation, which may, in some cases, be different than those of Outbrain’s shareholders generally, will be set forth in Outbrain’s proxy statement relating to the Stockholder Approval when it becomes available.

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