In recent months, Israeli public technology companies have reported acquisitions totaling more than $ 4 billion. Today, the content recommendation company also joins the trend Outbrain , Which acquires Video Intelligence (vi), a Swiss private company that has developed a platform for integrating content and relevant video advertising on digital platforms and smart TVs. The purchase volume is approximately $ 55 million, with the cash component standing at $ 46.75 million, and the rest will be paid in 412,500 shares of Outbrain (in fact, the value of the transaction is determined by Outbrain’s value in the offering; . The deal is expected to close in the first quarter of 2022 and contribute to OutBrain profits.
According to the company’s announcement, vi’s technology, based on artificial intelligence, allows content sites to increase user engagement and monetization by adding contextually relevant video content to each article, and among other things, it has a collaboration with Samsung TV +.
Outbrain, managed by co-CEOs Yaron Galai and David Costman, is traded on the Nasdaq for $ 856 million. At the end of the third quarter, it had $ 482 million in the coffers after raising $ 160 million in an IPO in the summer, and even earlier raised $ 200 million in convertible bonds from Opost.
“The deal increases our video market sixfold”
“This is our first acquisition as a public company,” Costman told Globes today. “We are very focused on our core business and the growth plans we talked about at the time of the IPO – increasing the added value for the major publishers and enabling more and more solutions for advertisers. Purchasing on the one hand greatly increases what we give to publishers. “We give a video that is relevant to the same article, and do monetization through video. For example, if there is an article about sports, a video about sports is given, with monetization of a video before or after it. This increases the video market by six times.”
Costman explains that there are two types of video – outstream, where the surfer reads an article on the Internet and encounters a video that is just advertising; And Instream – video of content in which (before, in the middle or after) integrated advertising. According to him, we locate the context of the article and make a customized video accessible; For example, if the domain is tourism, they will incorporate a video relevant to the reader. Prices, accordingly, are higher. In the outstream market where Outbrain operates today (and accounts for about 10% of its business), it is targeting a market of about $ 10 billion. The market it is now entering is 6 times larger.
“The deal is not big, but it is a complementary deal, which also gives us a first foothold in CTV (smart TVs). At vi there are very experienced people in the field of video,” Costman adds.
Are there more purchases on the episode?
“We are all Haman looking but very focused on increasing the core business. We have no need today to enter new areas with very large deals.”
Israeli public companies have been making a lot of acquisitions lately, why do you think this is happening?
“First of all, we recruit for mainly for this. We are for example a very profitable company, we do not need the cash to finance the day-to-day operations. As a private company we made 3 acquisitions in 4 years, we retained the CEOs and today the acquisitions are a significant part of our operations. As a public company it is much easier, there is both cash and stock, so it is not surprising.
“There are also different reasons for each of the acquisitions. We are very focused and looking for strategic acceleration for what we do. Others make acquisitions for financial reasons, or for business diversity and entry into a new market. We do not need acquisitions to grow fast or buy a company with revenue for it, so we “We are not considering making a purchase that will put us in a new market. Our market is very attractive.”
Since the IPO, Outbrain has lost about 23% of its value; The company was first issued at a value of $ 1.1 billion. According to Costman, “We are very focused on presenting results and acting on our strategy. The stock will ultimately ‘take care of itself’.”
Israelis buy for hundreds of millions of dollars
As mentioned, Outbrain joins the growing trend of acquisitions of companies (from Israel and abroad) by public technology companies from Israel. If in the past Israeli companies were mostly sold, in recent months they seem to be in a fever of acquisitions. For example, Kape, a cyber security company traded in London, recently announced a $ 936 million acquisition (the deal is yet to be completed). Tabula , A content recommendation company (which competes with Outbrain), announced shortly after it became a public company on the Nasdaq a large $ 800 million deal in which it entered the field of online commerce. The digital insurance company Lemonade Announced a few weeks ago the acquisition of an American company in the field of digital car insurance at a value of $ 500 million for the acquired company, and also Iron Source andPolitics Have recently made acquisitions, each for $ 400 million. And of course there are also purchases on a smaller scale.
Common to a large portion of the acquisitions made is that the companies announced them after completing a fundraiser. Tabula, Iron Source, Autonomous andCelebrity Are technology companies from Israel that were merged into SPAC companies and thus became public companies, while raising money from SPAC and within PIPE (SPAC companies are inactive companies that raise money from the public in order to acquire an existing company within a pre-determined period; PIPE is accompanied by a private placement). . P
Shortly after raising money they found it useful in the form of acquiring companies in their areas of activity or in tangent areas. In case of Jay Frog And Pleiatica, the acquisitions came several months after their first IPOs on Wall Street. In other cases, as inAudiocodes or Nova , These are long-standing Wall Street companies that have raised money in recent months (Audiocodes has made a secondary offering and Nova has raised convertible bonds).
After such acquisitions, and at a time when many stocks are trading at historically high prices, and can also be used as currency for buying needs, it is natural that companies seeking to accelerate their growth rates or expand the market to which they turn will do so through company acquisitions. On the other hand, of the supply of companies for acquisition, even if the values of the acquisition targets have risen, it seems that there are still opportunities. As Eitan Oppenheim, CEO of Nova, recently told Globes: “The Corona has made, on the one hand, those who have managed to cope well, become stronger. But there is a list of companies that have not succeeded, and they are more available today to talk about a purchase. “
Another thing that can explain the acquisitions is the fact that today Israeli companies are larger and reach a higher value market; They are more mature than before, and in many cases the entrepreneurs / CEOs strive to lead them to become huge companies in their field. Part of the matter is acquiring companies.