Private equity firm Vector Capital has agreed to acquire ad tech company Sizmek. “Vector will acquire all of the outstanding shares of Sizmek common stock for $3.90 per share in an all-cash tender offer,” according to a release, which values the company at $122 million.
Notably, Sizmek’s market cap, just prior to the acquisition announcement, was $74 million, down from $150 million last year – though it has shot up to $109 million since the news hit.
The buy caps off a long period of tremendous change for the company once known as Digital Generation (DG). More than three years ago, DG had a strong linear TV ad delivery business, but the company sold those assets to its rival Extreme Reach for $485 million in August 2013 and soon thereafter rebranded as Sizmek.
Over the next couple of years, the company began acquiring ad tech firms with an eye toward building out what it called an “open ad stack” – with particular concentration in mobile. For instance, in May 2015 it bought mobile DSP StrikeAd. Mobile was often a revenue driver for Sizmek, even as its overall revenues declined, usually due to the deceleration of its rich media business.
Last year, Sizmek rejiggered its sales staff and this past spring it proclaimed that it had rebuilt and consolidated its entire stack – including semantic tech provider Peer39 and MediaMind.
One ad tech executive, speaking on background, noted that the hit on Sizmek’s rich media business probably devalued the company more than it should have, given the opportunity in MediaMind’s significant ad serving business. Still, that growth wasn’t fast enough to satisfy investors. Going private therefore makes sense for Sizmek, the executive said, and Vector will come out on top.
In a statement, company CEO Neil Nguyen indicated Sizmek’s impending acquisition by Vector will provide it the opportunity to finish out its vision: “We believe this transaction provides Sizmek with the resources and flexibility to execute upon our long-term strategy of becoming the leading independent, global ad management platform.”
Sizmek is not Vector’s first ad tech acquisition: The PE company acquired audio ad tech company Triton Digital in March 2015.
