Three years after its launch, technology company Innovid Corp. (NYSE: CTV) announced a merger that would return it to a privately held company. The merger with Flashtalking, owned by Mediaocean, is being conducted at a price of US$3.15 per Innovid share, representing a valuation of US$525 million for Innovid (enterprise value US$500 million). The deal represents a 94.4% premium to Innovid’s closing stock price yesterday, and at a price Innovid has not seen in more than two years. The company became listed in a SPAC deal in 2021 worth $1.3 billion.
Innovid has developed a software platform to create, deliver, measure and optimize ads. The combined company will be managed by Innovid’s co-founder and CEO, Zvika Netter, and will be called Innovid. Netter founded Innovid in 2007, with Tal Chalosin and Zach Zigdon. After raising $251 million in a 2021 SPAC deal, it bought Scottish firm TVSquared for $160 million.
Netter says the deal comes against the backdrop of a very large market opportunity, among other things due to competition issues related to Google. “Awareness of the disconnect between technology, advertising and media has risen dramatically in the past year, and this creates an opportunity to move forward quickly,” he says. “Innoved has the largest advertisers as clients – Procter & Gamble, Apple, and Disney, for example – and they prefer to separate technology infrastructure from media, and choose a neutral company like Innoved.”
Innovid is a software company with a gross profit margin of more than 80%, but in the general market it is lumped in with ad-tech companies that buy and sell media, resulting in lower price-to-earnings ratios than those of software companies, Netter says. “It’s a failure in the public arena,” he says. “The merger will reflect a more realistic value proposition for us.”
In 2021, it merged into a $1.3 billion SPAC.
“Yes, but we’re not back in 2021. Too many things have changed. It’s important to realize that we are a healthy, profitable company that has increased its profitability for nine straight quarters.”
Mediaocean will buy all the shares in Innovid, and the deal does not include a capital injection into the company itself, but Netter says the two combined companies are profitable and will have money to invest, and as a private company it will also have a different investment profile. He confirms that there are no plans to lay off workers. Innovid employs 460 people, 100 of them at its development center in Israel, and Flashtalking 300.
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Innovid has acquired Scottish company TVSquared for $160 million
Among Innovid’s shareholders are ION Crossover Partners, with a 7.9% stake at the last reporting date, which would give it $36.2 million in the merger; Sequoia Capital, with a 6.7% stake valued at $30.5 million in the merger; Phoenix Holdings, 5.5%, valued at $25.3 million; Lauderdale, 5%, at $22.9 million. Netter owns 5.7% and will receive $25.8 million in the deal.
In the first nine months of 2024, Innovid’s revenue grew 11.5% to $113 million, and on a GAAP basis it reduced its net loss 60% to $12.1 million. In the third quarter, it achieved a profit of $4.7 million.
For Mediaocean, Deutsche Bank Securities Inc. As a financial advisor, White & Case serves as legal advisor to Bain & Company and 3C Ventures, which provides strategic advisory. For Innovid, Evercore is acting as financial advisor and Latham & Watkins is acting as legal advisor.
Published by Globes, Israel Business News – en.globes.co.il – on November 21, 2024.
© Copyright Globes Publisher Itonut (1983) Ltd., 2024.