Mobile ad firm Millennial Media on Tuesday announced its plans to acquire Nexage, a mobile ad exchange and supply-side platform (SSP), for $107.5 million.
Millennial will pay approximately $22.5 million in cash and approximately $85 million in stock, “subject to certain adjustments,” according to a release.
The deal is a continuation of this summer’s trend of M&A activity in the ad tech space. The $107.5 million price point is a bit below other deals that occurred this summer, but a triple-digit million sale is nothing to scoff at.
However, with 80% of the deal’s value tied to Millennial’s stock price, Nexage is banking -- quite literally -- on a turnaround. Millennial’s stock price has dropped over 90% since its IPO in 2012, and is currently trading at just under $2 per share. (Investors seemed to react kindly to the news that Millennial is acquiring Nexage, however, as the stock has jumped over 11% since open, as of presstime.)
Nexage is likely part of that turnaround plan, but Millennial is tight-lipped when it comes to the exact game plan. Nearly one year ago to the day, Millennial launched its own mobile ad exchange, dubbed the MMX. When reached for comment, a Millennial spokesperson told Real-Time Daily that, because the deal hasn’t closed yet (it’s expected to by the end of the year), they weren’t ready to discuss plans regarding the future of the two mobile ad exchanges.
Nexage plugs itself as a “premium” mobile ad exchange, and this summer released some data to substantiate that claim. The company said that 35% of the inventory available for real-time bidding (RTB) on its exchange is either interstitials, rich media or video ad formats, and noted that if the current growth rates hold, those three ad formats will represent 50% of all mobile inventory on its exchange by 2015. Nexage has seen spend through its exchange grow rapidly year-over-year, and also recently noted that private exchange use via Nexage is up 718% thus far in 2014.
Millennial launched its ad exchange in partnership with AppNexus, and the Millennial spokesperson asserted the company has been pleased with the performance of the MMX, saying that AppNexus has been a “fantastic” partner. The rep noted, however, that Millennial wanted to buy and own mobile programmatic tech.
The rep added that Millennial is hoping to continue a partnership with AppNexus, but acknowledged that the relationship will “probably continue to evolve.” In a note this morning, Michael Barrett, CEO of Millennial, wrote: “Our proposed acquisition of Nexage will provide us with new and greater capabilities."
Will Millennial scrap the MMX mobile ad exchange it launched one year ago? It certainly seems like a possibility, but we can only speculate and attempt to read between the lines. An “evolving” partnership with AppNexus, “new and greater capabilities” for Millennial once the deal closes and the company’s desire to own rather than partner all make it sound like MMX will be nixed, but again, that’s just speculation; the company did also note that they have been pleased with MMX and, in his note this morning, Barrett wrote that Millennial “will continue to offer the full service solutions you have come to expect.”
We’ll be keeping tabs on this one.