AT&T has snapped up adtech giant AppNexus in a deal estimated to be worth more than a billion dollars as it looks to bulk up its adtech capabilities. The move marks the telcoms giant's second acquisition within a month.
The pair haven't publicly disclosed the value of the transaction, but last week Wall Street Journal sources placed it at circa $1.6bn amid talk of a takeover – earlier AppNexus had been valued at $2bn.
AT&T hopes the takeover of the adtech business will accelerate the growth of its ad platform, plus strengthen its presence in the fast developing advanced TV sector.
AppNexus will now become a part of AT&T advertising and analytics offering, led by the telecom's chief executive of its advertising and analytics division Brian Lesser.
The transaction is expected to close during the third quarter of 2018, with each company continuing to operate independently afterwards.
“Innovation is core to the heritage of both AT&T and AppNexus, and we have an exciting opportunity to chart the future course of advertising together," added Lesser.
In the immediate aftermath of AT&T's $85bn Time Warner takeover being given the seal of approval, multiple market observers tipped a flood of M&A activity in the sector, with adtech outfits tipped as a likely hot commodity.
Terence Kawaja, chief executive of investment bank Luma Partners, told The Drum: “Now that AT&T has spent $150bn on traditional TV content and distribution [Time Warner & DirecTV], they now need digital monetization and data capabilities to take advantage.”
He added: “For AT&T specifically it will set the stage for digital M&A,” says Luma Partners’ Kawaja. “Now that AT&T has spent $150bn on traditional TV content and distribution [Time Warner & DirecTV], they now need digital monetization and data capabilities to take advantage.”
Ciaran O’Kane, chief executive of WireCorp, similarly told The Drum that Lesser and "the rest of these super-sized telco amalgams" will start buying soon. "Lesser didn't spend the vast majority of his career understanding adtech to not see the blind spots in AT&T's ability to monetize its owned-and-operated media,” he added.
WPP currently owns an 18% stake in the New York-based company and ex-WPP boss Martin Sorrell chipped in on the speculation that AT&T would swoop in and broker a deal last week during a chat with The Drum at Cannes Lions.
Sorrell pre-empted he would be "a little bit sad" if the deal went through, like it has, because Brian O'Kelley [AppNexus founder and chief exec] is "an outstanding entrepreneur".
He added that Lesser's departure from WPP for AT&T at the end of 2017 was a "disaster" for Group M, but said he could understand why the exec departed.
Sorrell went on: "[The AT&T deal] is confirmation that clearly it's building an advertising platform and it's going to use AppNexus as the competitor to what was Atlas (which is now baked into Facebook). So if we have another platform that's a third force, in a sense, it's AppNexus."