RhythmOne confirms $185m YuMe takeover as part of wider M&A strategy

The deal builds on RhythmOne's earlier purchase of RadiumOne in 2017 / RhythmOne

Following earlier speculation they were in negotiations, RhythmOne has confirmed it will purchase video adtech outfit YuMe, in a $185m deal building on its RadiumOne purchase earlier this year.

The company's leadership has now publicly declared that its 2017 acqusitions form part of a strategy to assemble a consolidated adtech offering to take on established players such as Facebook and Google.

UK-based RhythmOne, which is listed on the AIM, today (September 5) confirmed the deal for YuMe, itself listed on the New York Stock Exchange, with the acquisition consisting of one-third in cash, and two-thirds in shares, and expected to close in the first quarter of 2018.

RhythmOne claims that post the closure of the proposed deal, the combined entity will be “a complete end-to-end platform” – the goal of many of the recent adtech mergers and acquisition (M&A) this year.

A RhythmOne release states: “The combination of RhythmOne and YuMe will bring together demand-side and supply-side strengths in the fast growing segments of mobile, video, connected TV and programmatic trading."

The note goes on to state that the company’s board of directors have “identified a window of opportunity” in the adtech sector to build a credible, scaled offering that can pose as a “sustainable alternative to entrenched players in the industry.”

A note from its board of directors also goes on to reference to “a contraction in market valuations of public and private companies” in recent years – something that is likely fueling the number of M&A deals in the sector.

The note goes on to read: “The directors believe that, as a result of the acquisition, the company will be a more attractive alternative to the largest networks and exchanges, represented by companies such as Google and Facebook.”

The release also features a statement from RhythmOne, chief executive, Ted Hastings, it read: “Through YuMe, RhythmOne gains access to premium video supply including emerging, high-value connected TV inventory, unique customer insights, cross-screen targeting technology and established demand relationships. We believe this combination will give RhythmOne the resources, relationships and talent to drive value for its shareholders, and a true return on investment.”

Earlier in the year, RhythmOne announced it has acquired certain assets of RadiumOne for an undisclosed amount – although speculation since, has pegged the figure at circa $22m.

Speaking at the time of the purchase, Richard Nunn, RhythmOne’s chief revenue officer, said the acquisition would provide advertisers with insights, prediction, campaign targeting, execution and measurement.

The number of M&A deals in the wider digital media sector numbered 115, according to a Results International study. Although the second quarter was not as busy, 102 deals were still scored during the period, it was an increase of 24 on the same period in 2016.

More recent activity has seen consolidation among adtech players – as opposed to buys from strategic players, or strategic players – most notably the proposed takeover of Rocket Fuel by Sizmek, Rubicon Project's purchase of nToggle, and Outbrain's acquisition of Zemanta.

Another notable trend in this year's adtech M&A has been the growing popularity of companies possessing video capabilities with publicly-listed Tremor Video agreeing to sell its demand-side platform (DSP) to TapTica for $50m. Meanwhile, Europe's largest broadcaster RTL Group announced it was to complete its purchase of SpotX last week, plus earlier in the year Teads sold to US-based telco Altice.

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