October 22, 2014

Yahoo in acquisition talks with BrightRoll

Ingrid Lunden and Sarah Buhr of TechCrunch broke the news yesterday that Yahoo CEO Marissa Mayer is cooking up another acquisition deal, this time with video advertising platform BrightRoll, in spite of being under seemingly constant fire for her ambiguous business strategy.

"The pressure on Ms. Mayer intensified last month, when activist investor Starboard revealed it had taken a stake in Yahoo and sent a letter to the CEO," The Wall Street Journal reports. "In it, Starboard pushed the company to reduce costs, explore a combination with AOL Inc. and consider splitting its core business from the Asian assets."

Mayer, however, stated at a conference in July that she is not considering a merger with AOL — a sentiment AOL's CEO, Tim Armstrong, echoed at a recent TechCrunch conference in Europe. 

After making $5.8 billion from Alibaba Group Holding Ltd.'s initial public offering, it appears Mayer's acquisition strategy involves tapping that funding to increase Yahoo's ability to generate more revenue from video content. BrightRoll, a self-described platform that "manages the planning, targeting, optimizing and reporting of digital video advertising campaigns," would likely help Yahoo achieve that growth. The deal, if it goes through, will have an estimated value of about $700 million.

According to Business Insider, some shareholders and ex-Yahoo-employees don't exactly approve of the impending deal, criticizing Yahoo for paying too much for BrightRoll when it could have acquired one of its competitors for far less. Others think acquiring a video ad-centric company is a smart move in general, but for the fact that Yahoo may not have the personnel to support an expansion into that realm.

This proposed deal, and the uncertainty with which shareholders and former Yahoo insiders view it, underscores the importance of building a sound acquisition strategy. If you're considering proposing a tech merger or acquisition deal, contact an M&A advisor to ensure you're making the right move.