Altice acquires VC-backed Teads for €285m

The acquisition values Teads at an enterprise value of up to €285m on a cash- and debt-free basis.

According to Altice, the purchase price is subject to Teads achieving certain revenue targets in 2017; 75% of the purchase price will be due at closing, with the remaining 25% earn-out being subject to Teads' 2017 revenue performance, and being payable in early 2018.

The senior management of Teads, including executive chair Pierre Chappaz and CEO Bertrand Quesada, will continue to lead the business, and have agreed to reinvest a significant portion of their proceeds. Pierre Chappaz will join Altice's management board, and will be responsible for all its advertising activities.

Teads reported 44% year-on-year revenue growth and €187.7m in sales for 2016; it also claims to have been EBITDA-positive for the fourth year in a row. As part of Altice, which currently generates €700m in revenues, the startup said it would be able to move its offering onto new platforms, making it available on TV, laptop, mobile and tablets.

For Altice, the merger will create an opportunity to grow its advertising platform and better monetise its core telecommunications access and content business, the company said in a statement.

The acquisition is subject to competition reviews and is expected to close in mid-2017.

Previous funding
According to Crunchbase, Teads has raised a total of $127.93m through 10 funding rounds, including three series A rounds: $5.3m in 2007, led by Lightspeed Venture Partners and completed by Gemini Israel Ventures (the round enabled Teads to merge with Ebuzzing in 2009); €4m in 2010; and $5.2m in 2013, led by Elaia Partners and completed by Partech Ventures.

Three debt financing rounds also contributed to the startup's funding: €8m in 2013, £10m in 2015 and $47m in 2016, according to Crunchbase. In 2011, Teads also received a $25m equity round provided by Gemini Israel Ventures, Gimv, Lightspeed and others. The company raised a €24m series-B round in 2015: Gimv, Elaia Partners, Partech and BPI France invested €12m, with the remainder coming in the form of debt.

Teads has mentioned the possibility of a Nasdaq listing on several occasions in the past.

Company
Established in its current form in 2011 (the group was first founded by Pierre Chappaz as Wikio in 2005 in France) and now headquartered in New York, Teads develops a video advertisement platform for publishers and advertisement networks.

Its inSuite format family includes inRead, a mid-article advertisement format; inStream, which plays a video advertisement before video content; and inFlow, which displays a skippable video advertisement between web pages. Clients include French dailies Le Monde and Le Figaro as well as the Financial Times, Forbes, the Economist, the Guardian, Yahoo and Reuters.

Teads has 25 additional offices worldwide, including in Paris, London, San Francisco, Madrid, Rome, Stockholm and Sydney. Its 100-strong R&D workforce is based in Montpellier. Currently employing around 450 people in total, the company claims it has 1.2 billion unique visitors on its platform, including 720 million via mobile.

People
Altice – Michel Combes (CEO).
Teads – Pierre Chappaz (executive chair).

Advisers
Equity – Deloitte, Cyril Stivala, Jawad Benchekroun (financial due diligence); Jérôme Gertler, Isabelle de La Gorce (legal); Véronique Child, Florence Théodose (environmental due diligence); Benoît Dambre, Benjamin Gohet (tax); Mayer Brown, Laurent Borey, Olivier Aubouin (legal).
Vendor – Orrick Rambaud Martel, Saam Golshani, Benjamin Cichostepski, Patrick Hubert (legal); DLA Piper (legal).

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