M&A Alert—November 2, 2011
Yahoo Acquires interclick
Transaction Size: $270mm
interclick offers marketers data-enabled on-line ad targeting capabilities. interclick’s analytic platform, known as Open Segment Manager (“OMS”), assesses a wide variety of commercially available data (over 20 sources), as well as proprietary data provided by customers, to segment and target the desired audience for on-line ad placement. interclick then actively manages the placement of ads across a wide variety of publishers, advertising exchanges and networks and provides in-depth assessment of ad campaign effectiveness. Commercial data sources include BlueKai, DataLogix, TargusInfo and Nielson. Targeting options include characteristics such as behavioral, demographic, geographic, past purchases, lifestyle and survey results. interclick provides both on-line display ad and video ad analytic and placement capabilities. Customers include brands (large advertisers) and advertising agencies. The Company has approximately 120 employees. Competitors include Audience Science, Adconion Media Group, WPP’s 24/7 Real Media, Burst Media, Krux Digital, Bluekai, BrightTag and eXelate. interclick is headquartered in New York, was founded in 2006 and became a NASDAQ-listed company in 2009.
Yahoo offers search and display advertising services and provides online content such as Yahoo News, Yahoo Sports and Yahoo Finance. Yahoo has recently focused on building its online content offerings. Yahoo acquired Associated Content (content farming, May 2010), Citizen Sports (sports content and application, March 2010), TotalTrave.com (online travel, September 2009) and Maktoob (Arabic social network, August 2009). Yahoo also has bolstered its online advertising technology by acquiring 5to1 (May 2011 for $26mm) and Dapper (October 2010 for $55mm. ). Amidst rumor of a possible sale, Yahoo is now seeking a permanent CEO after Carol Bartz, Yahoo’s previous CEO, departed in September 2011. Ross Levinsohn, EVP, Americas region, was the key executive sponsor of the acquisition.
Yahoo will pay $9 for each interclick share.
Equity Value: $270mm
Enterprise Value (a): $263mm
Transaction Multiples (b):
EV/Net Income: 56.0x
One Day Prior: 22%
One Week Prior: 29%
One Month Prior: 62%
a) Includes $6.7mm net cash as of June 30, 2011
b) According to interclick’s SEC filing, interclick generated TTM revenue of $118mm, TTM EBITDA of $11mm and TTM net income of $5mm.
Comparable transactions include Valueclick’s acquisition of Dotomi (dynamic display advertising) for $295mm (3.7x LTM revenue multiple) in August 2011, Adobe’sacquisition of Demdex (behavioral targeting) for $58mm in January 2011, AOL’sacquisition of 5Min Media (video content targeting) for $65mm in September 2010 and Google’s acquisition of Invite Media (display advertising exchange) for $70mm in June 2010. Click each for AP M&A Alerts.
Major publishers such as Yahoo are constantly seeking to provide their advertiser clients access to more and more refined targeted audiences. One of Yahoo’s greatest assets is the rich data that it harvests from its users. interclick’s data analytic platform offers Yahoo the opportunity to use its proprietary data to offer advertisers uniquely targeted ad placement and improve ad campaign results.
Architect Partners’ Observations
Again, as we’ve mentioned many times, the value of converting data to actionable insight is immense within the advertising market. We remain in the early stages of this trend with plenty of innovation and optimization left to be done. This transaction highlights again the strategic value of unique data analytic capabilities.
Yahoo is well served to continue to integrate ad targeting capabilities into its offerings to advertisers. It’s two major competitors also have extremely rich proprietary data sets and a culture which recognizes the value of such data. Google recently overtook Yahoo in display advertising market share (after being a non-player until three years ago) and Facebook is quickly gaining share as well.