M&A Alert - September 15, 2009
Adobe Agrees to Acquire Omniture
Transaction Overview
On September 15, 2009, Adobe (NASDAQ: ADBE) announced that it has agreed to purchase Omniture (NASDAQ: OMTR) for $1.7b in cash.
Target Description
Founded in 1996, Omniture, Inc. (who was formerly known as MyComputer.com and changed name to Omniture in 2002) is based in Orem, Utah. Omniture provides a series of products and services that help marketing and executives within advertising agencies evaluate and analyze the effectiveness of websites and on-line marketing and advertising campaigns. Products include software which analyze online visitor acquisitions effectiveness, ad and marketing conversion, and website effectiveness. Omniture’s customers are corporate marketing groups, and more recently advertising agencies, from which it generates about 20%-30% of its revenues. Omniture went public in 2006 at $6.50 share price. In 2009, WPP invested $25mm in Omniture and struck a concurrent business relationship.
Buyer Description
Adobe offers a broad set of software for professional publishing, Web design and development, professional photography, video production, animation, and motion graphic production. It also offers solutions that create compelling content experiences, user interfaces, and data services on mobile and non-PC devices, such as cellular phones, consumer devices, and Internet connected hand-held devices. Given the strategic importance of the transaction, this transaction was sponsored by the senior management team of Adobe.
Transaction Parameters
Adobe will purchase all common equity of Omniture at $21.50 per share totaling $1.7b in cash. Adobe will use a combination of existing cash and pre-existing credit facility. Omniture represents Adobe’s largest acquisition since Macromedia, which Adobe paid $3.7b in April 2005. Omniture is expected to result in revenue synergy and be accretive to Adobe’s earnings starting in FY 2010.
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| Purchase price | $1.7b |
| LTM Revenue | $336mm |
| LTM EBITDA | $34mm |
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| Purchase Price Multiples | |
| LTM Revenue | 5.1x |
| LTM EBITDA | 49.4x |
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| Offer Premium | |
| 1 day before | 26% |
| Average 30 day prior to announcement | 43% |
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Source: Architect Partners, Capital IQ and Public Information
Strategic Rationale
This transaction represents a major shift in thinking as to how analytic tools are deployed. Historically, application and web developers would build their products with little regards for the integration of analytic capabilities. Analytics were “tacked on” later. Adobe’s strategy is to incorporate analytics and “tracking code” directly into the development process, thereby making analytic capabilities more powerful, more pervasive and less expensive. This integration has become increasingly important as software revenue models are shifting from license fees to full or partial monetization via marketing and advertising.
Architect Partners’ Observations
We’re impressed with Adobe’s move and strategic vision. The acquisition of Omniture represents a recognition of the increasing importance of the monetization traditions of media infiltrating the online, mobile and software applications and services worlds. We believe this move will spur Adobe’s competitors such as Microsoft, Google, Oracle and IBM to evaluate their product roadmap and strategy. Other online analytic vendor to watch include WebTrends, CoreMetrics and ValueClick (NASDAQ: VCLK).