Millennial Media Inc. (MM:US) agreed to acquire Jumptap Inc. for about $225 million in stock, scooping up a competitor in the market for mobile-device advertising.
Jumptap investors will get about 24.6 million Millennial Media shares, based on their Aug. 9 price, according to a statement yesterday. The stock closed at $9.13 that day.
Combining the two companies will make it easier for Millennial, which has seen slowing sales growth, to challenge Google Inc.’s dominance in mobile advertising. It also will represent an exit for Jumptap’s investors, who had planned for an initial public offering before Baltimore-based Millennial went public last year and started slipping in the stock market.
“The addition of products, people and technology to the market-leading Millennial Media portfolio will further the mission of building the leading mobile platform worldwide,” Jumptap Chief Executive Officer George Bell said in the statement.
Millennial is the only publicly traded company focused solely on mobile advertising. The performance of its stock, which has fallen 35 percent since the IPO in March 2012, has cast a shadow on similar companies tapping public markets. Video-ad provider YuMe Inc. lowered its IPO price last week because of slack demand, while Tremor Video Inc. has tumbled since its IPO and Adap.tv opted instead for a sale to AOL Inc.
Millennial reported $57 million in second-quarter revenue, up 45 percent from $39.4 million a year earlier, the company said yesterday in a statement. That fell short of the average analyst estimate of $59.2 million, according to data compiled by Bloomberg. Earnings excluding some items were 2 cents a share, beating an estimated 1-cent loss.
Millennial dropped as much as 14 percent (MM:US) to $7.28 yesterday in extended trading after the results were announced. The stock fell 8.1 percent to $8.50 at the New York close.
Jumptap, based in Cambridge, Massachusetts, has expertise in real-time bidding on ads and creating campaigns that reach users on different screens. Its ads are seen by more than 218 million mobile users in the U.S. and 439 million worldwide, according to the statement.
Founded in 2005, Jumptap raised $121.5 million in venture funding as of last year. Its investors included General Catalyst Partners, Redpoint Ventures LLC, Summerhill Venture Partners, Valhalla Partners LP, WPP Plc (WPP) and Keating Capital Inc. (KIPO:US)
Bell, who joined in 2010, refocused the company on targeted mobile advertising, instead of mobile-search products. At the time, he cut its staff of 80 by about half and then aggressively began hiring. As of last year, the closely held startup had about 150 employees.
To contact the reporters on this story: Nick Turner in New York at email@example.com; Sarah Frier in New York at firstname.lastname@example.org
To contact the editor responsible for this story: Nick Turner at email@example.com