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RhythmOne board recommends merger with Taptica

“The combination of the two businesses is expected to create one of the leading video advertising companies in the US, delivering significant economies of scale, customer base and supply chains to compete with the industry leaders”

digital marketing
RhythmOne used to be called Blinkx – the company spun out of Autonomy in the mid-noughties

A merger between two of the UK’s leading online video marketing firms has moved a step closer to completion after RhythmOne PLC (LON:RTHM) bosses gave their backing to the tie-up with Taptica International PLC (LON:TAP).

The pair confirmed they were in “advanced discussions” last Wednesday following several weeks of initial talks and RhythmOne has now recommended Taptica’s offer to its shareholders.

READ: Taptica set to merge with RhythmOne

“I believe this transaction best positions RhythmOne for the future,” said RhythmOne chairman Eric Singer.

“As we look into and plan for our next fiscal year, combining RhythmOne and Taptica addresses the importance of scale in our industry.”

RhythmOne specialises in online video placement, while Taptica uses ‘big data’ and artificial intelligence to target adverts at its clients’ desired audiences.

As expected, the deal is structured as an offer by Taptica that will see it owning 50.1% of the enlarged group and Rhythm One owning the remaining 49.9%.

Shareholders on board already

For every 33 RhythmOne shares held, each shareholder will be entitled to receive 28 shares in the enlarged company, which will operate under the Taptica brand. Based on Friday’s closing price of 170.4p, the offer values RhythmOne at around £135mln.

Taptica also confirmed press reports that Ofer Druker, currently the head of its US division, will become the chief executive of the new, enlarged business.

Just over half of RhthymOne shareholders have already agreed to the merger, while 46.6% of Taptica investors have committed their support.

As part of the transaction, the enlarged company plans to launch a US$15mln share buyback programme once the deal goes through.

US market a key focus

“Taptica is pleased to announce the proposed merger with RhythmOne in a transaction we believe to be in the best long-term interest of Taptica shareholders,” said Taptica chairman Tim Weller.

“The enlarged group is expected to create one of the leading video advertising platforms in the United States and will therefore be well-positioned to exploit the growing demand for OTT and CTV (connected TV).”

“[It] will be able to offer a comprehensive technology platform to its customers with a full demand side and supply side offering to create interesting global opportunities.”

He added: “This, coupled with the enlarged group's global scale of operation, is important to retaining and gaining customers and will enable it to compete with other market leaders in the video advertising space.”

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