Contact: Scott Denne
Opera Software departs from its measured mobile advertising M&A strategy with the $75m purchase of AdColony, which operates a mobile ad network for HD video ads. Opera has built a mobile ad business with $133m in trailing revenue, having spent only about $40m (excluding earnouts) on a half dozen companies, starting with the acquisition in January 2010 of AdMarvel for $8.3m.
This deal is very different. For one, a $75m upfront payment makes it Opera’s largest. And though the mobile software firm is no stranger to earnouts, it’s on the hook for as much as $275m more in cash and stock payments should AdColony hit its revenue and EBITDA targets. Unlike Opera’s previous targets, AdColony comes with substantial revenue: it finished 2013 with $53m in revenue, up from $11m in 2012, and is expected to contribute $170m to Opera’s 2015 top line (25% of total anticipated revenue).
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