Three years after its flotation, technology company Innovid Corp. (NYSE: CTV) has announced a merger that will turn it back into a privately-held company. The merger, with Flashtalking, owned by Mediaocean, is taking place at a price of $3.15 per Innovid share, a valuation of $525 million for Innovid (enterprise value $500 million). The deal represents a 94.4% premium on the closing price of Innovid shares yesterday, and is at a price that Innovid has not seen for over two years. The company became listed in a SPAC deal in 2021 at a valuation of $1.3 billion.
Innovid has developed a software platform for the creation, delivery, measurement, and optimization of advertising. The merged company will be managed by Innovid co-founder and CEO Zvika Netter, and will be called Innovid. Netter founded Innovid in 2007, together with Tal Chalozin and Zack Zigdon. After raising $251 million in the 2021 SPAC deal, it bought a Scottish company, TVSquared, for $160 million.
Netter says that the deal comes against a background of a very large opportunity in the market, among other things because of the competition issues relating to Google. "Awareness of the question of separation between technology, advertising and media has risen greatly in the last year, and that creates an opportunity to move forward fast," he says. "Innovid has the biggest advertisers as its customers - Procter & Gamble, Apple, and Disney, for example - and they prefer to separate between the technological infrastructure and media, and to choose a neutral company like Innovid."
Netter says Innovid is a software company with a gross profit margin of over 80%, but that in the public market it is classed with adtech companies that buy and sell media, resulting in p/e ratios lower than those for software companies. "It’s a failure of the public arena," he says. "The merger will reflect a more realistic value for us."
In 2021, you merged into a SPAC at a valuation of $1.3 billion.
"Yes, but we’re no longer in 2021. Very many things have changed. It’s important to realize that we are a healthy, profitable company that has grown its profitability for nine consecutive quarters."
Mediaocean will buy all the shares in Innovid, and the deal does not include an injection of capital into the company itself, but Netter says that both merging companies are profitable and will have money for investment, and as a private company it will also have a different investment profile. He stresses that no layoffs are planned. Innovid employs 460 people, 100 of them at its development center in Israel, and Flashtalking 300.
Among the shareholders in Innovid are ION Crossover Partners, with a 7.9% stake at the last reporting date, which will give it $36.2 million in the merger; Sequoia Capital, with a 6.7% stake, worth $30.5 million in the merger; The Phoenix Holdings, with 5.5%, worth $25.3 million; and Lauderdale, with 5%, worth $22.9 million. Netter holds 5.7%, and will receive $25.8 million in the deal.
In the first nine months of 2024, Innovid’s revenue grew by 11.5% to $113 million, and on a GAAP basis it narrowed its net loss by 60% to $12.1 million. In the third quarter, it posted a profit of $4.7 million.
For Mediaocean, Deutsche Bank Securities Inc. is serving as financial advisor and White & Case is serving as legal advisor with Bain & Company and 3C Ventures providing strategic consulting. For Innovid, Evercore is acting as financial advisor and Latham & Watkins as legal advisor.
Published by Globes, Israel business news - en.globes.co.il - on November 21, 2024.
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