Somoto (TASE: SMTO) has acquired Israeli digital advertising network (ad-network) Terser Tude Ltd, the company said. (Terser), specializing in video advertising solutions and in particular video for mobile, which constitute 65 percent of its activity.
The total consideration for the transaction, subject to various milestones, is up to NIS 14 million in cash and shares (approximately USD 3.6 million), out of which the amount depends on the net profit of Terser in 2016, representing approximately 75 percent of the total consideration of the transaction.
On the closing date, a total of approximately NIS 2.1 million in cash will be paid, and Terser will become a fully-owned (100 percent) subsidiary of Somoto.
A total of up to approximately NIS 940 thousand in cash, contingent on Terser´s results of 2015, will be paid to the existing shareholders of Terser in March 2016.
The remainder of the payment of up to approximately NIS 10.8 million, in Somoto shares and cash, subject to milestones (the Earn Out) and based adhering to net income of NIS 10 million during the Earn Out period, beginning November 2015 is expected to be completed at the end of 2016. Additionally, under the framework of the agreement, Somoto will provide Terser, upon completion of the transaction, a loan in the amount of NIS 2.61 million.
Terser offers advertisers and content owners monetization solutions for mobile and desktop-based solutions from video advertising directly with providers of advertising space on the Internet or through third-parties. The company, which was established in 2014, and started to generate significant revenue during 2015, has about ten active clients and partnerships with dozens of advertising agencies and digital exchanges.
Terser´s revenue for the first ten months of 2015 amounted to NIS 11.8 million, with an operating profit of NIS 2.5 million (22 percent of revenue). In Somoto´s estimate, Terser´s revenue in the fourth quarter of 2015 is expected to be approximately NIS 9 million, with an operating margin of approximately 23 percent of revenue.
Terser was founded by a group of Israeli entrepreneurs and today is managed by Jonathan Barkan, CEO who brings extensive operational experience to Terser. Terser´s employees will engage key positions in Somoto in the field of mobile and video, and will contribute their knowledge and experience to continue the strategic expansion of Somoto in this area.
Somoto was founded in 2009 and is engaged in the marketing, distribution, development and automatic intelligent installation (Smart Installer) applications from advertisers, various monetization solutions and solutions for tracking and reporting for applications installation for the personal computer (PC) on Windows, Mac and mobile devices (mobile) environments, using advanced technology developed by the company.