Inside the implosion of the Outbrain-Taboola deal

Taboola Outbrain merger

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A deal to combine the two biggest content-recommendation companies, Taboola and Outbrain, is off.

The two reached a deal to combine to create a $2 billion company back in November, but are expected to announce Wednesday that they’re calling it off.

Outbrain and Taboola’s products — the “recommended for you”-type article boxes you find at the bottom of news articles — are ubiquitous across the web. Over the years, they have provided meaningful revenue to publishers from Fox News to CNN by renting space to advertisers at the bottom of the publishers’ article pages.

Under the proposed deal, Outbrain’s name would go away and Taboola’s CEO would run the combined company, which was pitched as a way to help publishers compete for ad dollars with Google and Facebook.

But the regulatory process delayed the deal from getting done. The Wall Street Journal reported that the Justice Department was looking into whether a merger of the two would hurt competition and in turn, harm publishers that rely on those two companies for revenue. The government ended up not challenging the deal.

But while the deal was being delayed, the pandemic hit, temporarily denting their ad revenue. The process dragging out also exposed differences in the companies’ culture, Taboola being known for its aggressive sales tactics while Outbrain saw itself as catering to premium publishers.

In the end, Taboola changed the terms of its offer to Outbrain, from 30% ownership and $250 million cash to far less cash, and Outbrain balked.

News that the deal is off could bring relief to publishers who feared that the combination of the two archrivals would stifle competition and crush the revenue that had become a reliable source of their business.

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As for both companies, they say they’re healthy financially after a strong year for performance-driven advertisers and looking to grow through acquisitions and extending to other kinds of revenue.

Taboola for its part is setting its sights on commerce and TV advertising, CEO Adam Singolda said. “I’m going to send publishers more traffic from other devices than Google sends,” he crowed.

“We’re very confident about where the business is and our performance this year,” said David Kostman, co-CEO of Outbrain. “The thesis of this merger was scale, to create a real competitor to Facebook and Google. We’ll grow organically, but also look for opportunities to increase our reach and data to compete better.”

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Source:: Business Insider


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