M&A Alert—February 1, 2016
Telenor agrees to acquire cross-device marketing company Tapad for $360 million.
Author: John Ascher-Roberts, Steve Payne
Transaction Size: $360mm
On February 1, 2015, Telenor (OB:TEL), one of the world’s largest mobile operators, announced an agreement to acquire mobile adtech company Tapad for $360 million.
Tapad tracks consumers’ usage across their connected devices (smartphone, tablets, Internet, connected TVs, etc.) to better understand consumer behavior and interests, and sells this data to brands and agencies to help them target ads to consumers across their various devices. Tapad’s Device Graph assimilates billions of data points from different devices and platforms and helps marketers more precisely recognize, measure and monetize their audiences. Tapad has 160+ U.S. clients including major brands such as Audi, American Airlines, Oracle and Turbo Tax. Its competitors include Adbrain, Crosswise, DataXu and Drawbridge. The company projected $57 million in revenue for 2015, but also expected to lose $12 million in EBITDA.
Are Traasdahl, Tapad CEO, and Dag Liodden, CTO, founded the New York-based company in 2010. Prior to its acquisition, it had received $33.8 million in funding from Spring Capital (which owned 46.5% of the company), FirstMark Capital, Firsthand Technology, Avalon Ventures, and WPP. Traasdahl, notably, is the president of Spring Capital, according to his LinkedIn profile.
Telenor is the largest Norwegian mobile operator. Globally, Telenor is larger than AT&T Mobile or Verizon, with mobile operations in Norway, Denmark, Sweden, Ukraine, Hungary, Thailand, Malaysia, Bangladesh, Pakistan, Montenegro, Serbia, and Russia. Based in Oslo, Norway, group revenue for the twelve months ending in September 2015 was $13.2 billion.
The company currently has a market capitalization of $23.1 billion.
Telenor is purchasing 95% of Tapad for $360 million on a debt and cash-free basis. The founders will own the remaining 5%.
Comparable transactions include Qualia’s acquisition of BlueCava in January of 2016 (undisclosed), Neustar’s acquisition of MarketShare Partners for $450 million in November of 2015 (7.9x LTM rev), Verizon’s acquisition of AOL for $4.4 billion in May of 2015 (1.7x LTM rev), Twitter’s acquisition of TellApart for $532.6 million in April of 2015 (5.3x rev), and Singtel’s acquisitions of Adconion for $235 million in June of 2014 (1.2x rev), Kontera for $150 million in May of 2014 (5.0x rev) and Amobee for $321 million in March of 2012 (10.7x rev).
As mobile carriers face increasing pressure on their legacy offerings, carriers are looking to add more services on top of the network, leveraging not just their own subscriber bases but the masses of data that they collect. Big telcos are looking to acquire both ad tech and digital media companies as they try to build new revenue models, as we’ve seen with Verizon’s acquisition of AOL and Singtel’s acquisitions of Amobee, Adconium and Kontera.
Architect Partners’ Observations
We have been wondering for some years when mobile operators would brave the potential outcry about data privacy and tap into their sizeable assets of proprietary network usage and user data. Singtel and Verizon paved the way, and Telenor is now moving aggressively in this area.
This transaction is about both adtech and analytics. As the former category loses some luster with fewer transactions and lower values in 2015, the latter continues to surge.
The fact that Tapad’s founders are Norwegian adds an interesting perspective to this transaction, but Traasdahl had been a successful entrepreneur previously, and Telenor is a global, not regional, player.