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Tremor jumps after it buys News Corp's Unruly video marketplace

"Unruly will immediately benefit from Tremor's wide range of formats, including advanced TV and In-App, as well as an analytics suite and yield optimisation tools," said Norman Johnston, the CEO of Unruly

Tremor International Ltd -

Tremor International Ltd (LON:TRMR), the video advertising technology company, is to acquire Unruly, News Corp's programmatic video marketplace.

In return for transferring ownership of Unruly to Tremor, News Corp (NASDAQ:NWS) will receive a 6.91% stake in the AIM-listed firm.

Tremor has also entered into a global partnership with News Corp that will equip Tremor with the exclusive right to sell out-stream video on more than 50 News Corp titles in the UK, US and Australia. Under the terms of the transaction, Tremor International has committed to an advertising spend of £30mln with News Corp over a three-year period as part of this agreement.

The acquisition of Unruly will significantly extend Tremor’s international footprint, bolster its supply-side platform, deepen its data, pricing and intelligence capabilities, expand its customer base – including the addition of a number of Fortune 500 companies – and raise its profile through its partnership with News Corp.

The acquisition of Unruly is expected to break even in the current fiscal year, excluding integration costs, and to contribute positively to underlying earnings from 2021 onwards.

News Corp, meanwhile, has agreed to contribute cash towards the cost of integrating Unruly with Tremor. In addition, Rebekah Brooks, the chief executive (CEO) of News UK, will be joining the board of Tremor as a non-executive director while it is anticipated that Norman Johnston, the CEO of Unruly, will join Tremor’s board in due course.

As well as announcing the acquisition, Tremor gave a brief trading update in which it said adjusted underlying earnings (EBITDA) for the year just ended are expected to be in line with expectations but revenue will be a bit lower than anticipated, owing to continued difficulties in the company’s Performance division and the company’s focus on higher-margin revenues.

Tremor reckons it finished 2019 with around US$75mln of net cash after completing US$6mln of buy-back payments in the second half of 2019 and making a US$5mln advance payment for the extension of the exclusive Alphonso partnership for an additional two years.

"This transaction is another important milestone in Tremor's transformation into a leading video advertising business. We are delighted to be acquiring a truly world-class asset in Unruly, but equally important is the formation of our new strategic alliance with News Corp, which will provide Tremor access to globally recognised media brands, in a partnership we believe to be mutually beneficial for both companies,” said Ofer Druker, the chief executive officer of Tremor International.

"In addition, not only does this transaction deliver a number of commercial opportunities for the company, but it is a significant endorsement of Tremor as a business, given the reputation of News Corp globally,” he added.

In a note to clients, analysts at 'house' broker finnCap said they have adjusted their forecasts for the group to reflect the trading comments, but noted that Tremor shares trade "at a substantial discount to its peers on 12M fwd multiples of 2.4x EV/EBITDA and 5x adj P/E, and we look forward to Tremor issuing a more detailed trading update in late January."

They repeated a 500p target price Tremor shares, which in lunchtime trade were up 4.4% at 177.50p.

 -- Adds broker comment, updates share price --

Quick facts: Tremor International Ltd

Price: 177.25 GBX

AIM:TRMR
Market: AIM
Market Cap: £234.29 m
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