Magnite To Acquire SpotX From RTL Group For $1.17 Billion

Online advertising platform Magnite has entered into a definitive agreement today to acquire the video advertising platform SpotX from RTL Group for $1.17 billion for a combination of cash and equity.

Consideration

The consideration consists of $560 million in cash and 14 million shares of Magnite stock. Magnite plans to fund the cash portion using some cash on hand while raising the rest through committed financing from Goldman Sachs. This represents a total price of $1.17 billion based on the closing price of Magnite on February 4, 2021.

Synergies

The advertising firm is targeting over $35 million in run-rate operating cost synergies with over half of the synergies realized within the first year post the deal completion. The merger is expected to conclude in the second quarter of 2021 subject to satisfaction of regulatory approvals and customary closing conditions.

Advisors

Financial advisers to Magnite include Goldman Sachs and LUMA while Gibson Dunn served as legal counsel.

From SpotXchange To SpotX

Founded by Michael Shehan in 2007, SpotXchange was the first online video advertising marketplace at the time. The company raised its first round of angel funding in 2008 which led to additional development of its platform consequently fueling it to launch the first real-time bidding solution.

Rebranding

In the following years, the Denver, Colorado-based SpotXchange introduced several products including Otto and SkipIT. The company rebranded itself in 2014 with a new website, logo, tagline, and overall look to represent its progress over the last several years.

Purchase By RTL Group

RTL Group joined SpotXchange in 2014 by acquiring a 65% majority stake in the company. RTL Group is based in Luxembourg and Cologne, Germany. The media company operates around 68 television channels and 31 radio stations in Germany, France, and other European countries.

In the following year, SpotXchange shortened its name to SpotX to represent its evolution to a holistic inventory management platform, especially for the supply side. In 2017, RTL Group acquired the remaining shares of SpotX and emerged as the full owner of SpotX. According to RTL Group CEO Thomas Rabe, the sale of SpotX aligns with their strategy of growing the existing European digital businesses.

Revenue

Preliminary non-GAAP net revenue for the full year 2020 was $116 million, out of which $67 million was from CTV.

Magnite

Los Angeles, California-based Magnite stands as an independent sell-side advertising platform that is used by publishers to monetize content across all digital formats including desktop, mobile, audio, and CTV.

Financials

Magnite revealed preliminary fourth-quarter results for 2020 which show GAAP revenue of $82 million, representing a 69% jump on as-reported basis, and up 20% on a pro forma basis from the same quarter last year. CTV revenue was posted at $15.3 million, up 53% on a pro forma basis.

Net income was $5.8 million while adjusted EBITDA was $29.9 million showing a 36% adjusted EBITDA margin.

SpotX Acquisition

The acquisition of SpotX will allow Magnite to grow rapidly while catering to a wider set of consumer needs. It would also enable brands and agencies to acquire premium CTV inventory at scale.

Through the merger, Magnite and SpotX will form the largest independent CTV and video advertising platforms present in the marketplace. Together, they will offer improved support for sellers, provide an alternative to the CTV advertising market’s prominent players, and create efficiency for buyers.

Wider Clientele

The combined entity will serve the world’s top programmers, broadcasters, platforms, and device manufacturers including A+E Networks, Crackle Plus, The CW Network, Discovery, Disney/Hulu, Electronic Arts, Fox Corporation, fuboTV, Microsoft, Newsy, Philo TV, Pluto TV, Roku, Samsung, Sling TV, Tubi, ViacomCBS, Vizio, Vudu, WarnerMedia, and Xumo.

 

Magnite and SpotX will continue to operate independently until the completion of the deal.