(Bloomberg) -- Billionaire Patrick Drahi’s Altice International has agreed to sell its video advertising platform Teads SA to US ad company Outbrain Inc. in a $1 billion deal that will help the telecommunications empire cut debt.
The deal will see Teads and Outbrain merge to create one of the largest open internet advertising platforms, Outbrain said in a statement on Thursday.
Outbrain will provide $725 million upfront cash and $25 million deferred cash, along with 35 million shares of common stock of Outbrain, and $105 million of convertible preferred equity, the companies said. The transaction will result in Altice owning 42% of Outbrain’s common stock and up to 47% of the company if its convertible preferred equity is converted into common stock.
Altice has been trying to sell off assets over the past year in an effort to slash debt after years of acquisitions. Sales have been complicated by the fallout from a corruption investigation into key individuals tied to the group. Altice has said it’s the victim of the alleged wrongdoings.
“Valuation is below expectations, but closing a deal was essential,” said Alexis Sebah, a portfolio manager at Edmond de Rothschild Asset Management. “It shows some commitment and will marginally improve credit metrics.”
Bought by Altice in 2017 in a deal worth €285 million, Teads specializes in a video format that plays automatically as you scroll down a webpage and other tools for creating and targeting custom ads. Outbrain provides a recommendation platform that promotes articles, blog posts, videos and other types of content.
Outbrain Chief Executive Officer David Kostman will run the new entity and current Teads co-CEOs Bertrand Quesada and Jeremy Arditi will serve as co-presidents.
“The combination of our highly-complementary offerings accelerates our vision to become the preferred partner to deliver meaningful brand outcomes across premium, quality media environments,” Kostman said in a statement.
Teads is part of Altice International, one of three silos of Drahi’s conglomerate, which also includes Altice France and Altice USA Inc.. The group has put several assets up for sale, including Altice Portugal, the unit at the center of the corruption investigation involving Armando Pereira, co-founder of Altice and Drahi’s right-hand before his 2023 arrest.
Proceeds from the sale of Teads would be used to cut leverage, Altice management said on a call in May. Altice International still targets net leverage of 4 to 4.5 times earnings before interest, taxes, depreciation, and amortization, it said in the statement Thursday.
“The important question left is if they are going to use the proceeds to pay down debt or if they are going to follow the Altice France template,” said Sebah.
Earlier this year, Altice France moved assets to unrestricted subsidiaries, making it harder for creditors to claim those assets unless the company goes bankrupt. More recently, the company moved some of the proceeds of the sale of its media business into an entity out of creditors’ reach, Bloomberg reported.
(Updates with comments from Alexis Sebah and additional context)
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