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Why Telaria Stock Surged 15% in January

By John Ballard - Feb 4, 2020 at 1:36PM

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Investors were optimistic about the company's future after it announced a merger with Rubicon Project.

What happened

Shares of Telaria gained 15.2% in value last month, according to data provided by S&P Global Market Intelligence. In December, Telaria (TLRA) and The Rubicon Project (MGNI 5.94%) announced their merger, which will create the largest independent sell-side advertising platform, and promises to drive strong growth for investors. 

The deal is a stock-for-stock transaction: Investors will receive 1.082 shares of Rubicon Project for each share of Telaria they own. The transaction is expected to close in the first half of 2020.

A man's hands typing on a laptop with a report displayed on the screen.

Image source: Getty Images.

So what

In late January, the two companies released preliminary results that validated why investors are excited about the combination's growth prospects.

Telaria saw revenue surge 23% to $68 million for 2019, while Rubicon's revenue was up a similarly impressive 25%. Telaria's connected TV (CTV) revenue nearly doubled last year; that market represents a big growth opportunity for the combined company. 

"CTV continues to drive the growth of our business and exceeded our expectations in the fourth quarter and for the full year," said Telaria CEO Mark Zagorski. "We believe bringing our two companies together will enable us to accelerate the growth of our CTV business and bolster our capabilities in desktop and mobile video." 

Now what

After the merger is complete, Telaria will have more resources to take advantage of the growth opportunity in CTV, which is the fastest-growing digital medium. 

The combination of Telaria and Rubicon will have offices in 11 countries, a diversified revenue stream, and a healthy balance sheet with $150 million in cash and no debt. Plus, management expects annual cost synergies of $15 million to $20 million, which should pad adjusted EBITDA.

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