Results International’s Julie Langley on the Adobe TubeMogul deal

Photoshop software maker Adobe Systems Inc said on Thursday it would buy advertising company TubeMogul Inc for about $540 million, net of debt and cash, giving it a bigger presence in the rapidly growing online video market.

Adobe’s $14 per share cash offer represents an 82.5 percent premium to TubeMogul’s Wednesday close.

Shares of TubeMogul, which allows advertisers to buy video ad space using its software, jumped to $13.95 in early trading on Thursday.

The deal will help Adobe add an ad buying platform to its digital marketing unit, which offers tools for businesses to analyze customer interactions and manage social media content.

Advertising technology firms such as TubeMogul, Rocket Fuel Inc and Tremor Video Inc face fierce competition from online advertising giants Facebook Inc and Alphabet Inc’s Google.

Up to Wednesday’s close, TubeMogul’s shares had fallen nearly 44 percent this year.

Facebook, Google and Twitter Inc have all been betting big on video over the past year, a format where advertisers are willing to pay a premium for a few seconds of users’ undivided attention.

“Whether it’s episodic TV, indie films or Hollywood blockbusters, video consumption is exploding across every device and brands are following those eyeballs,” said Brad Rencher, Adobe’s executive vice president of digital marketing.

Adobe said the acquisition would not have an impact on its adjusted earnings in the year ending December 2017.

Julie Langley, partner at global M&A advisers, Results International.

Julie says:

 The public markets have been an inhospitable place for adtech for the past couple of years.  TubeMogul’s shares were down 44% since the start of the year immediately before this announcement.   Adobe has probably seen this as a good opportunity to buy a substantial video adtech asset.  Equally for TubeMogul shareholders it’s a chance to get what in the current climate must look like a good return – they IPO’d at $7 per share and the adobe offer is $13.95.

This acquisition is also further evidence of the convergence between and marketing and ad technology, coming hot on the heels of Salesforce’s $700m acquisition of Krux.  The marketing tech vendors are moving ever further into ad tech and media buying. 

The deal is further demonstration of Adobe continuing to add adtech and media buying capabilities to its marketing cloud – also evidenced by its acquisition of UGC business Livefyre earlier in the year.

Source: Reuters & Results International

  Adobe, Advertising Technology, M&A, Results International, TubeMogul