Sizmek acquires Rocket Fuel for adtech consolidation

Claudine Rigal
Juillet 20, 2017

Under the terms of the agreement, an affiliate of Sizmek - backed by Vector Capital - will commence a tender offer for all of the outstanding shares of Rocket Fuel common stock for US$2.60 per share in cash, which represents valuing the company at around $145 million.

The two companies plan to combine their technology and scale in the hope of providing ad buyers with an alternative to Alphabet Inc.'s Google and Facebook Inc., as well as other ad tech vendors. ValuEngine cut Rocket Fuel from a hold rating to a sell rating in a research report on Wednesday, June 14th. The integrated platform is created to deliver and optimize media spend to engage, upsell and retarget consumers across addressable channels, including display, mobile, video, social and television, and across addressable devices, including tablets, personal computers, set top boxes, television and mobile phones.

Collectively, Sizmek and Rocket Fuel service more than 20,000 advertisers and 3,600 agencies to global audiences in over 70 countries.

The acquisition is certainly a bittersweet coda for Rocket Fuel, once named one of AdTech's hottest IPO's of 2013. Rocket Fuel offers similar capabilities plus a predictive marketing platform which it claims is powered by artificial intelligence. Combined, the two firms collect 77 cents of each new dollar spent on digital advertising in the US, according to research firm eMarketer. Morgan Stanley now owns 221,170 shares of the technology company's stock valued at $1,186,000 after buying an additional 6,916 shares during the period.

But the firm's share price began a precipitous decline in 2014.

Since then, Rocket Fuel has been hit by allegations of dealing in fraudulent ad inventory and eventually faced leadership changes and layoffs.

Randy Wootton, CEO of Rocket Fuel, said the union "creates one integrated, full-funnel solution to enable agencies and their brands address key performance objectives across paid, owned and earned media".

Rocket Fuel (NASDAQ:FUEL) last issued its quarterly earnings results on Tuesday, May 9th. It narrowed its net losses to $66 million, from $211 million in 2015. Rocket Fuel had a negative return on equity of 44.37% and a negative net margin of 15.09%. Mr. Wootton said the pivot was taking longer than expected and the costs of being a public company made this process more challenging.

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