Millennial Media (MM) to Acquire RTB Tech Provider Nexage in $107.5M Deal

Millennial Media (NYSE: MM) has signed a definitive agreement to acquire Nexage for approximately $107.5 million in cash and stock, subject to certain adjustments. Based in Boston, privately held Nexage is a leading provider of Real-Time-Bidding (RTB) technology that helps to automate the buying and selling of mobile advertising.

“We are in a very exciting time right now as we help to build, educate and advance the role of RTB and programmatic solutions to advertisers, publishers, and developers,” said Michael Barrett, President and CEO of Millennial Media. “Our vision is to create a full-stack solution that enables us to open the flow of impressions, operate a leading independent exchange, and maximize the yield for our publishers. The opportunity to integrate Nexage’s programmatic technology with our deep roots and heritage in agency relationships will uniquely position us in this fast paced ecosystem. Together, our companies will be able to offer managed services for agencies and a complete set of programmatic tools for automated buyers. We are looking forward to having the Nexage team join our family as we continue to build the next generation of mobile advertising.”

The proposed acquisition of Nexage underpins Millennial Media’s platform business in three key areas:

Increasing yield for publishers via expertise and scale

Nexage’s offerings will complement Millennial Media’s demand from agencies and advertisers with a complete programmatic marketplace. Nexage’s marketplace includes:

• A leading exchange that allows Demand Side Platforms (DSPs) and trading desks to buy ad impressions via programmatic direct, private exchange and open auctions.
• A Supply Side Platform (SSP) and mediation solution that allows publishers to expose impressions to classic networks - including the Facebook Audience Network, Google’s Admob, and iAd. In total, Nexage is connected to over 225 programmatic buyers and networks, providing one of the most complete mobile monetization solutions globally.
• An ad server that publishers and developers can utilize to launch directly-sold campaigns.

Allowing advertisers to buy impressions programmatically

Millennial Media is known for its full service global sales, service, and creative teams. These teams are able to provide consultative sales based on their deep relationships with marketers and agencies. Following the Nexage acquisition, Millennial Media will be in a position to enable buyers to execute deals via public and private RTB auctions and programmatic direct deals.

Enabling data and audience buying

With Millennial Media’s existing data management platform (DMP) as its backbone, the two companies will be in a distinct position to enrich impressions through first and third party data. Millennial Media’s mobile-first DMP can ingest publisher and advertiser data to enable re-targeting, audience extensions, and cross-device attribution.

“Millennial Media is an extremely well known name in our industry, and a real pioneer and leader in bringing brand dollars into mobile,” said Ernie Cormier, President and CEO of Nexage. “I believe the addition of Nexage’s platform and people will further Millennial Media’s mission in creating a leading independent mobile advertising platform and vital programmatic marketplace.”

Terms

Under the terms of the agreement, Millennial Media will pay approximately $22.5 million in cash and approximately $85 million in stock, subject to certain adjustments. Accordingly, Nexage shareholders will receive approximately 37 million newly issued shares of Millennial Media based on a price of $2.21 per share of Millennial Media common stock, which is the volume weighted average trading price per share during the fifteen trading days immediately up to and including September 16, 2014, corresponding to approximately 26% ownership for Nexage shareholders on a pro forma combined basis, based on issued and outstanding shares. The closing of the acquisition is subject to the satisfaction of various customary closing conditions, including approval by Millennial Media’s shareholders of the proposed issuance of the shares to Nexage shareholders in accordance with the rules of the New York Stock Exchange.

LUMA Securities acted as the financial advisor to Millennial Media and GCA Savvian acted as the financial advisor to Nexage.

Reaffirming Q3 2014 Outlook

In connection with today’s announcement, Millennial Media is reaffirming that it expects Q3 2014 total revenue to be in the range of $65 million to $70 million and Adjusted EBITDA to be a loss of between $(7) million and $(8) million.

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