Perion, the Israel-based publicly listed adtech firm, said Monday it has reached a deal to acquire Hivestack, a Canadian adtech company that specializes in digital billboards and other outdoor ads, known in the industry as digital out of home advertising.
The deal structure consists of $100 million in cash on closing and an additional $25 million earn out spread over three years, which includes a $8.3 million retention bonus.
To reach the target, Hivestack must contribute $212 million in net revenue and $56 million in earnings before tax, interest, depreciation, and amortization, or EBITDA, in that three year time period.
Founded in 2017, Hivestack lets brands, agencies, and other digital ad buying platforms purchase digital billboards and other outdoor advertising in venues like bars and gas stations. Those advertisers can target ads based on things like audience concentration and weather conditions, and they can control and measure their campaigns in real time.
It also offers a supply-side platform that helps outdoor media owners monetize their inventory.
Hivestack’s clients have included Clear Channel, Uber, Warner Brothers Discovery, Intel, and The Trade Desk.
Perion CEO Tal Jacobson said the addition of Hivestack would add further diversification to its ad platform and expand its global footprint. Currently Perion generates around 85% of its revenue in the US; Hivestack has a strong presence in Asia and Europe as well as North America, he said. Research firm Magna predicts the global out of home ad market will grow 7% this year to $32 billion.
Perion offers a range of ad buying tools across search, display, and on connected TV channels. It’s made just under a dozen acquisitions, including acquiring the Undertone ad network for $180 million in 2015 and the video management and monetization platform Vidazoo for around $90 million in 2021.
Perion first met with the Hivestack team at the Cannes Lions advertising festival this past June and got a demo of its platform. Jacobson said Perion had met with “pretty much all” the companies in the digital out of home space but found Hivestack’s technology and targeting to be the most advanced. Plus, he was impressed that the management team had managed to grow the company through a global pandemic that decimated the out of home advertising industry as people were forced to stay inside.
Jacobson said Perion is planning to buy more companies in the coming months, with a particular focus on areas such as retail media, connected-TV, and measurement.
Perion had around $523 million in net cash on its balance sheet as of September 30. Its shares are currently trading at just under $30.
The Hivestack deal breathes some life into a notably subdued adtech M&A market. There were just 39 transactions in the first three quarters of 2023, down from 47 in the first three quarters of 2022, according to the investment bank LUMA Partners. Interest rate hikes, increased focuses on financial discipline, and tighter capital markets slowed deal volume, the bank said.
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