Investors in the adtech company AdTheorent Holding Company, Inc. (NASDAQ:ADTH) are set to receive a nice premium with the company’s announced acquisition by Cadent, LLC for $3.21 per share in cash.
The $324 million deal represents a 17% premium to AdTheorent’s 60-day volume-weighted average price and a 27% premium to its 90-day average as of March 28th. Upon completion of the transaction in the expected third quarter of 2024, AdTheorent will become a privately-held company under Cadent’s ownership.
Cadent is a leading provider of converged TV advertising solutions and is a portfolio company of the private equity firm Novacap. The combination allows Cadent to bolt-on AdTheorent’s machine learning advertising platform and technology.
For AdTheorent shareholders, the all-cash deal provides an attractive exit opportunity to cash out at a premium valuation. The company’s stock had traded between $2.15 and $3.35 over the past 52 weeks before the deal announcement sent shares surging over 40%.
AdTheorent’s board unanimously approved the transaction, stating that it “delivers immediate, certain and significant value” for shareholders. The company had gone public around two years ago, and CEO James Lawson noted that “the transaction validates the actions and investments we have made” positioning AdTheorent since then.
While the $3.21 per share price looks enticing for investors, AdTheorent did negotiate a 33-day “go-shop” period into the merger agreement. This allows the company’s advisors to actively solicit and consider superior proposals from other potential buyers through May 4th.
There is no guarantee that a better offer will emerge during the go-shop period. However, major AdTheorent shareholders controlling approximately 40% of the outstanding shares, including H.I.G. Growth Partners and company insiders, have already agreed to vote in favor of the Cadent transaction.
Unless a substantially higher bid comes in, the deal is expected to close in Q3 2024 after gaining AdTheorent shareholder approval and clearing regulatory hurdles including antitrust review.
For investors in AdTheorent, the timelines and deal certainty are important considerations. The deal with Cadent provides a unique opportunity to cash out at a premium valuation in the near-term. Alternatively, rejecting the deal leaves some possibility of a higher-priced acquisition down the road balanced against AdTheorent’s prospects and challenges operating independently.
The adtech sector has experienced significant volatility and compression in valuations over the past couple of years. In that context, AdTheorent’s ability to secure an all-cash transaction at a premium multiple could be viewed as a prudent move by the company’s board and leadership team.
As the “go-shop” period plays out over the next month, investors will be watching closely to see if any interloper emerges to potentially drive up the acquisition price for AdTheorent. But barring a topper bid, AdTheorent shareholders can likely bank on cashing in their stakes at a nice premium to recent trading prices before the company debuts as a Cadent subsidiary later this year.
