Digital advertising technology provider DG will pay $66 million in cash to acquire Limelight Networks' EyeWonder video and rich-media ad unit -- a steep discount from the $110 million deal Limelight struck for EyeWonder less than a year and a half ago.
DG said the deal will boost its position in interactive digital advertising products and services, and expects the EyeWonder deal to be accretive to DG's 2012 earnings per share.
"This deal is another step forward in expanding DG's presence in the fast-growing Internet advertising vertical," DG chairman and CEO Scott Ginsburg said in announcing the deal. "The combination of MediaMind, Unicast and EyeWonder brings together a highly qualified roster of professionals, a complementary footprint of offices and geographic locations, along with innovative technologies to connect advertisers and agencies with the most desirable audiences on a worldwide basis."
Limelight in December 2009 announced an agreement to acquire EyeWonder for $110 million, comprising $62 million in cash and 12.74 million shares of Limelight common stock.
On Tuesday, Limelight announced that its board approved a $25 million share repurchase program. With the EyeWonder sale, Limelight now anticipates third quarter 2011 revenue to be $46.1 million to $47.3 million, a range that includes EyeWonder revenues through Aug. 31, 2011. The company expects revenue excluding EyeWonder to be in the range of $41.5 million to $42.5 million. In addition, Limelight anticipates that it will incur transaction and severance related expenses of approximately $1.6 million during the third quarter.
EyeWonder's Predictive Behavioral Targeting system served more than 3.5 billion targeted impressions in the second quarter of 2011, according to the companies.
DG said it expects EyeWonder to generate revenue of approximately $36 million to $37 million for full year 2011. In addition, the company anticipates realizing $7 million in cost synergies in the 12 months following the close of the EyeWonder transaction.
The deal, subject to closing conditions, is expected to close on Sept. 1. Bank of America Merrill Lynch acted as financial advisor to DG; RBC Capital Markets provided Limelight with a fairness opinion related to this transaction.
Dallas-based DG, formerly known as DG FastChannel, provides technology solutions to the advertising, broadcast and publishing industries. DG's Internet division provides digital advertising solutions to more than 9,000 advertisers, using approximately 3,800 media and creative agencies across 8,200 Web publishers in 64 countries.