M&A Alert—February 22, 2017
Singtel’s digital ad division Amobee acquires demand side and data management platform, Turn, for $310 million.
Transaction Size: $310mm
On February 22, 2017, Amobee, a subsidiary of Singtel (SGX: Z74), announced an agreement to acquire Redwood City-based data management and demand side platform provider Turn for $310 million.
Turn started as a demand-side platform (“DSP”) to help advertisers and agencies manage the process of buying digital advertising. Today, the Turn DSP offers programmatic ad buying capabilities in real-time. In 2011, Turn introduced its complementary data management platform (“DMP”), Turn DMP, which aggregates first and third party consumer data and applies data analytics solutions to allow advertisers to better understand and target existing customers and attract new customers. Turn clients include KraftHeinz, Toyota and L’Oréal USA. Key competitors in this category are Google and Facebook. Other notable, smaller competitors include Rocket Fuel, AppNexus, MediaMath, AdForm, and DataXu.
Jim Barnett, Chairman, and John Ellis founded the company in 2004, and Bruce Falk stepped in as CEO in September 2015. Turn has received $177.3M in debt and equity funding from Blackrock, BBVA, Clearbridge Investments, Fidelity Investments, Firsthand Technology Fund, Focus Ventures, Greenspring Associates, NorthPort Investments, Norwest Venture Partners (Jeff Crowe), Shasta Ventures (Jim Barnett) and Trident Capital (John Moragne). Turn has 423 employees.
Amobee sells software which enables advertisers, publishers and wireless carriers to deliver targeted mobile marketing and advertising to mobile customers. It offers a data platform, Brand Intelligence, that analyzes over 60 billion digital content engagements daily across the web, mobile, social and video platforms and provides actionable data and insights around real time and historical trends, consumer sentiment, relevant topics and audience behaviors. Also, its Media Activation product allows for mobile ad serving, campaign management, cross-device targeting, yield optimization, ad inventory management and campaign analytics. Its marketing formats include rich media, video, social and 3D. Customers include eBay, Zynga, Google, Skype, Mozilla and Nokia, and it has API integrations with Snapchat, Facebook, Instagram and Twitter.
Amobee was itself acquired by Singapore Telecommunications, SingTel, in March 2012 for $321mm (10.7x LTM rev) in the first move by a major wireless carrier to enter the mobile advertising business (covered here). Today, SingTel has a market cap of $46.2B with LTM revenues of $11.7B.
Amobee is purchasing Turn for $310 million.
Transaction Value: $310M
TEV / Invested Capital 1.7x
Comparable DSP transactions include Adobe’s acquisition of video advertising specialist TubeMogul in November of 2016 for $540mm (2.5x LTM rev, covered here), AOL’s acquisitions of Millennial Media in September of 2015 for $238mm (0.8x LTM rev, covered here) and Covertro in May of 2014 for $101mm (10.1x invested cap, covered here), and Google’s acquisition of Invite Media in June of 2010 for $70mm (14.0x invested cap, covered here).
Comparable DMP transactions include Salesforce’s acquisition of Krux Digital in October of 2016 for $700mm (14.0x invested capital, covered here), Rocket Fuel’s acquisition of X+1 in August of 2014 for $230mm, Oracle’s acquisition of Bluekai in February of 2014 for $350mm (5.5x LTM revenue, covered in here), Neustar’s acquisition of Aggregate Knowledge in October of 2013 for $119mm (1.9x invested cap) and Adobe’s acquisition of DemDex in January of 2011 for $58mm (8.3x invested cap, covered here).
Amobee’s legacy is as a mobile advertising specialist, helping advertisers reach consumers on mobile devices. Major wireless carrier, Singtel, acquired Amobee in 2012 in the hopes of opening up a new revenue opportunity by delivering relevant, targeted advertisements and marketing messages to their customers. Singtel and Amobee have continued to execute on that vision, but also recognize that digital advertisers require both mobile and non-mobile ad placement. While Turn certainly has some mobile capabilities, its legacy business has primarily been around web ad placement.
While the U.S. market is dominated by Google and Facebook, the Asia Pacific market remains a large opportunity for Amobee as Singtel reaches 640 million customers across 22 countries in that area.
Architect Partners’ Observations
This is another challenging story in the advertising technology world. Two years ago, Turn raised a $80mm Series E round at a $700mm post-money valuation, 2.25x the eventual acquisition price.
For Singtel, this acquisition brings the total amount of money it has invested in adtech in the last five years to over a billion dollars. Its previous acquisitions include $235 million for ad network Adconion, $150 million for analytics business Kontera both in 2014, along with the $321 million it paid for Amobee itself in 2012.