Advertising technology provider TubeMogul (TUBE) has agreed to be acquired for more than $500 million, leaving industry followers to wonder if spring is finally coming to the sector.
Adobe Systems (ADBE) announced Thursday that it has agreed to acquire TubeMogul for about $540 million, or $14 per share. Adobe anticipated the transaction would close during the first quarter of its 2017 fiscal year, or by early March.
Shares of TubeMogul rallied 81.8% to $13.94 on Thursday from their $7.67 close on Wednesday.
Adobe received legal counsel from a Weil, Gotshal & Manges team of Jane Ross, Helyn Goldstein, John Brockland, Randi Singer, Amy Rubin, John Scribner, Steven Tyrrell and Ted Posner.
While the Emeryville, Calif., ad tech provider has fetched a nice premium, it also could have attracted a better deal down the road if it had been able to execute further as a standalone entity, Boenning & Scattergood analyst Murali Sankar said.
"This is a great deal for Adobe. I don't think they're paying a lot," he said, adding that the tie-up with Adobe will give TubeMogul access to data and marketing technology.
BMO Capital Markets analyst Daniel Salmon in a Thursday note said the deal equated to 1.6 times estimated gross revenue for 2017 and 2.3 times estimated gross profit.
As for the buyer, digital video advertising-focused TubeMogul will further expand Adobe's marketing footprint and enable the San Jose, Calif., company to better compete with its rivals.
"Heightened levels of competition between Adobe and Google -- which is expanding further into marketing technology to supplement its ad tech business -- is an important aspect of this transaction for investors to monitor," Pivotal Research Group analyst Brian Wieser wrote in a note Thursday. "This acquisition is also relevant in the context of competition with Oracle and Salesforce, especially in efforts to expand marketing cloud-related products among large agencies and advertisers."