December 2, 2020

Online Ad Giants Taboola, Outbrain Backtrack On Merger Plan

Ad-based content recommendation startups Taboola and Outbrain are calling off their planned merger, the Wall Street Journal reported Tuesday.

What Happened: The merger which would have given Outbrain shareholders $250 million in cash and 30% of the combined company fell through as the two could not renegotiate a new deal after COVID-19 hammered both the businesses, according to the Journal.

Baidu Inc (NASDAQ: BIDU)-backed Taboola sought to finance the deal by securing funds from JPMorgan Chase & Co (NYSE: JPM), Citigroup Inc (NYSE: C), and Israel’s Bank Leumi but the financing agreement expire last month and was not extended, people familiar with the matter told the Journal.

No breakup fee reportedly applies under the failed deal.

Why It Matters: Both Israel-founded, and now New York-based, startups are centered on giving publishers ad-based recommendations and dominate the segment, the Journal noted.

While the United States Department of Justice reportedly didn’t challenge the merger, antitrust regulators in the United Kingdom and Israel placed the deal under scrutiny, with the former concluding on a preliminary basis that the deal could lead to anticompetitive issues for publishers. 

In 2015, Baidu had invested to million in Taboola and said it would bring the company to China, where it, at the time, controlled 75% of the search engine market share.

Photo courtesy: Lord Belbury via Wikimedia

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