Millennial Media acquires Jumptap to consolidate mobile advertising

Contact: Tejas Venkatesh

In its largest acquisition by far, Millennial Media has announced the purchase of fellow mobile advertising firm Jumptap. Millennial will hand over 24.6 million of its shares and $12m in cash to Jumptap, valuing the target at $221m based on Millennial’s stock price close on Tuesday. The deal brings together the advertising networks of the two companies, which will now combine to form a larger network of ad properties to compete against Google.

Jumptap generated sales of $63.6m in 2012, including $10.5m from its telecom portal business, which it will shutter. Excluding that legacy business, Millennial is valuing Jumptap at 4.2x last year’s sales. For comparison, Millennial garners a valuation of 3.5x trailing sales on the public markets. On the other side, the transaction is a ho-hum exit for Jumptap’s investors – General Catalyst Partners, Redpoint Ventures and other firms – which collectively funneled roughly $120m into the nine-year-old company.

The deal comes even as Millennial reported a second-quarter earnings loss after the bell yesterday. The company also fell short of analyst expectations for its top line, reporting $57m in revenue versus the consensus estimate of $59m. As a result of the acquisition and its earnings report, Millennial’s stock plummeted more than 17% in early trading today. By midmorning, shares were changing hands at $7 per share, roughly half its IPO price of $13 in its March 2012 debut.

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