Content recommendation firm Outbrain has agreed to acquire advertising technology firm Teads for $1 billion, about $725 million in upfront cash, $25 million in deferred cash, 35 million shares of Outbrain common stock, and $105 million of convertible preferred equity.

The deal, announced Thursday, creates one of the largest full-funnel platforms for the open internet that includes connected television (CTV). 

Outbrain Chief Executive Officer David Kostman will continue to lead the combined company, with Teads co-chief executives Bertrand Quesada and Jeremy Arditi serving as co-presidents.

Kostman called the acquisition a "transformative transaction," and believes the combination of the two companies and the "transaction’s financial structure" positions Outbrain to deliver significant returns for shareholder.

Combined, the companies will operate under the Outbrain name to provide advertisers with services from connected television (CTV) to online shopping. Once complete, the company will break from other platform players that base value primarily on views and impressions. 

The new company -- which works with 20,000 direct advertisers with a base of more than 10,000 premium media environments -- plans to create one of the largest, direct supply paths across the open internet and CTV.

The plans will focus on delivering what executives at the companies call "tangible outcomes" such as attention, deep engagement, and ecommerce conversions -- in order to connect "a previously fragmented environment" across the open internet, which also includes CTV.

Outbrain is estimated to bring in advertising spend of more than $1.7 billion in 2024, supported by about 2,000 employees.

With the acquisition announcement, Outbrain also provided preliminary results for the second quarter of 2024, with Ex-TAC gross profit between $55 million and $57 million -- above the lower end of the previously issued guidance of $53 million -- with adjusted EBITDA of at least $6 million, above the upper end of the previously issued guidance range of $1-$4 million.

The preliminary results, the company says, are based on currently available information and do not include all the necessary information for a complete understanding of Outbrain’s results for its operations for the quarter ended June 30, 2024.

Actual results will be reported at Outbrain’s upcoming earnings release, scheduled for August 8, 2024, and may differ from the preliminary results presented here.