Millennial Media to be acquired by AOL

After a summer of speculation, AOL confirmed it will acquire Millennial Media on Thursday morning.
AOL is paying $1.75 per share of common stock for the publicly-traded, Canton-based adtech company. TechCrunch estimates the deal is worth $238 million when also accounting for Millennial’s debt. That’s a 31 percent premium over the closing price on Wednesday of $1.34.
Millennial Media will become a wholly owned subsidiary of AOL in the deal, which is expected to close in the fall. AOL, in turn, was recently acquired by Verizon for $4.4 billion in a deal that was mostly about adtech.
“By joining AOL, we will be adding additional mobile expertise to AOL’s growing technology assets,” said Michael Barrett, president and CEO of Millennial Media. “I am excited by what this acquisition means for our shareholders, our employees and our partners.”
In a release, AOL cast the move as a bid to expand its programmatic advertising offerings as the company looks to deepen its commitment to mobile. Millennial’s capabilities will bolster ONE, AOL’s existing adtech platform. AOL also recently took over Microsoft’s display ad business.
Millennial also brings more reach for AOL in the form of about 65,000 apps and a billion users.
“As we continue to invest in our platforms and technology, the acquisition of Millennial Media accelerates our competitive mobile offering in ONE by AOL and enhances our current publisher offering with an ‘all in’ monetization platform for app developers,” AOL President Bob Lord said in a statement.
The move will put two of Baltimore’s biggest adtech players under one umbrella. Millennial Media is headquartered in the Can Company in Canton. AOL has a large adtech presence in the city, which is now located a few blocks from Millennial Media in Natty Boh Tower. Together, the companies employ more than 400 people.
There’s also a bit of a full-circle feeling. Both companies trace their roots to Advertising.com, which AOL acquired and previously employed Millennial Media cofounders Paul Palmieri and Chris Brandenburg.
The Verizon-AOL deal was already seen as a big move for Baltimore, given the new resources that Verizon could pump into an outfit that was already an anchor of the city’s tech scene as a major employer that nurtured dev talent, as well as a sponsor and venue for events.
With Verizon making it plain that they wanted AOL for the advertising technology that grew out of Ad.com, there was already talk of Baltimore becoming an adtech hub. There was talk that there would be new competition, but now AOL has added the other largest shop in town. Still, don’t expect the “hub” talk to go anywhere. The combined offices share a neighborhood in the southeast corner of Canton that’s always been a center of Baltimore tech, and will have global reach.
The deal does, however, mean that Baltimore will have one less independent publicly traded company.
TechCruch initially reported that the deal was in the works back in July. On a conference call with investors last month, Barrett did little to stem the speculation when he said that an acquisition was on the table.
Like others over the past few years, that quarterly conference was to report losses to shareholders. Millennial Media went public with a splashy $130 million IPO in 2012 and was valued at $2 billion. Since then, the company lost 90 percent of its valuation amid reports of losses.
Millennial attempted to deal with the perception that it was lagging behind in tech by acquiring a series of firms aimed at programmatic advertising, which is an automated form of buying, selling and displaying ads that is quickly growng for apps on mobile devices. Following the acquisition of Boston-based Nexage, Millennial made that company’s founder its COO.
But the big issue, as Barrett acknowledged in August, was competition from bigger competitors like Facebook and Google. With their huge number of users and reach, those companies have their own inventory of content for ads. Millennial Media only worked with third-party buyers.
“We don’t possess our own inventory source, and that creates a certain economic disadvantage when it relates to monetization,” Barrett said in August.
Joining AOL and its parent company Verizon means that Millennial Media will no longer be able to say it is an independent ad company. But with Verizon’s aims to expand content on mobile devices, Millennial Media may eventually have the reach it desired.
And that appears to be what shareholders want. After news of the deal broke, Millennial’s stock “soared” 30 percent in premarket trading on Thursday, according to MarketWatch.