An independent video advertising infrastructure company founded in 2014 has just been acquired by Nexstar Media Group in an all-cash deal valued at approximately $90 million.
The acquisition by Nexstar of LKQD Technologies is subject to working capital and other adjustments including a minimum cash balance of $10 million, and a contingent earn out payment based on LKQD’s performance at the end of two years under Nexstar’s ownership.
The good news for investors? The transaction is expected to be immediately accretive to Nexstar’s operating results and free cash flow, does not materially alter Nexstar’s leverage position, and will be financed with cash generated from operations and funds provided by the company’s revolving credit facility.
According to comScore data for August 2017, LKQD Technologies’ video advertising platform has the largest reach in the U.S. to viewers across digital devices.
Nexstar says its purchase of LKQD “substantially broadens and diversifies Nexstar Digital’s portfolio with industry-leading, brand safe systems and technologies that are complementary to its current offerings of leading digital solutions and services for media publishers, and compelling and effective multi-platform marketing solutions for local and national advertisers.”
LKQD provides enterprise digital video advertising technology infrastructure for publishers and advertisers on all screens reaching approximately 115 million U.S. online video viewers across desktop, mobile-web, mobile-app and connected TVs.
LKQD uses Infrastructure as a Service (IaaS) technology.
Nexstar founder, chairman and President/CEO Perry Sook said, “Our acquisition of LKQD is consistent with our long-term strategic and financial growth objectives for Nexstar Digital as we unify, expand and invest in our technology platform to optimize results for our clients, while developing new revenue opportunities. By adhering to our disciplined acquisition and integration criteria, we are acquiring the leading, fast-growing, profitable, online video advertising business at an attractive, accretive valuation. Looking ahead, we continue to evaluate additional digital investments and select accretive transactions to drive the next phase of growth and success for Nexstar Digital.”
Gregory Raifman, President of Nexstar Digital, added, “The acquisition of LKQD significantly strengthens and expands Nexstar Digital’s product offerings with flexible and scalable end-to-end technology infrastructure systems that enable cross-device ad delivery with multi-dimensional analytics and reporting— giving buyers and sellers the power to efficiently reach audiences across all screens and devices. LKQD’s rapidly growing revenue, expanded client base and market-leading enterprise video ad technology infrastructure are key differentiators and represent an excellent strategic fit with Nexstar Digital’s leading local digital marketing tools, content monetization solutions and digital agency services.
“Importantly,” added Raifman, “in an environment where brands and ad buyers are rightfully concerned with online ad safety, LKQD’s inventory is among the highest quality in the ecosystem. This focus results in industry-leading metrics with respect to mitigating fraudulent traffic and ensuring brand safety. LKQD brings to Nexstar Digital a leading, fast-growing, profitable, online video advertising business that will enable us to further improve our competitiveness with other media and deliver more brand safe solutions to advertisers and brands.”
Senior members of the LKQD management team, including CEO and Co-Founder Brian DeFrancesco and CTO and Co-Founder Christophe Clapp, have entered into employment agreements with Nexstar.
LKQD will continue as a division of Nexstar Digital.
The transaction is expected to close late in 2017 or the first quarter of 2018.
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