Yahoo Inc. will snap up a 25% stake in Israeli-founded digital tech company Taboola Inc. as part of a 30-year commercial agreement to help boost advertiser offerings on its digital properties.
Under the terms of the exclusive agreement, Taboola will be the provider of native advertising and content on all of Yahoo’s internet sites, which is expected to drive more than 800 billion impressions. In exchange, Yahoo will receive 24.99% of Taboola’s total issued and outstanding shares, with about 60% in standard ordinary shares and 40% in new non-voting ordinary shares.
As a result of the deal, Yahoo will become Taboola’s largest single shareholder and will get one seat on the digital advertising platform’s board of directors. The two companies estimated that the partnership will generate $1 billion in annual revenue by 2025. The deal is expected to close in the first quarter of 2023.
Since Taboola started trading on the Nasdaq via SPAC merger last year at a valuation of about $2.6 billion, the stock has slumped over 60%, struggling with a slowdown in the advertising market. On Monday, Taboola shares jumped more than 50%, giving the software company a valuation of about $445 million.
Taboola, which says it “powers recommendations for the open web, helping people discover things they may like,” expects the deal will help increase its revenue, EBITDA and free cash flow.
“Taboola will benefit from Yahoo’s scale as a leading consumer tech company reaching nearly 900 million monthly active users worldwide as a top-ranked internet property across mail, sports, finance and news,” Taboola said in a joint statement.
Taboola was founded by CEO Adam Singolda in Israel in 2007. Once hailed as one of the best-known Israeli brands in the web world, Taboola developed technologies that direct users to related content on the internet, It has offices worldwide and is now based in New York.
“Everywhere I look, I see a rocket ship growth opportunity for both of us – native [advertising], ecommerce, video, header bidding (display) and more,” said Singolda.
Singolda said he expects the “partnership will meaningfully accelerate our growth flywheel, expanding our reach to more users on the open web with high-intent traffic to provide world-class solutions for advertisers, publishers, merchants and users in a cookie-less world.”
Taboola drives traffic from one site to another and uses machine learning to match internet users with news articles, blogs, videos, apps, products and other content they will likely find interesting. The company’s digital platform is used by advertisers, publishers, mobile carriers and other companies to increase engagement and monetization of their audiences and operates on websites, devices and apps.
Companies advertising with Taboola pay it when users click on links, and Taboola shares the revenue with the companies that host the link.
“Partnering with Taboola enables Yahoo to further enhance the contextual and native offerings within our unified advertising stack,” said Yahoo CEO Jim Lanzone. “The partnership also allows Yahoo and Taboola to continue to differentiate in market, improving user, advertiser and publisher experiences across properties, while benefiting from the long-term tailwinds in digital native advertising.”
Shoshanna Solomon contributed to this report.